India's foreign exchange reserves declined by $14.881 billion to settle at $765.901 billion for the week ended September 18, according to data released by the Reserve Bank of India. The sharp reduction follows a larger downward movement in the national reserves compared to the previous reporting week, when assets fell by $4.924 billion to $780.782 billion.
The contraction during the mid-September reporting period was driven primarily by a decrease in foreign currency assets, which serve as the largest component of India's external buffers. According to the central bank statistics, foreign currency assets dropped by $14.816 billion to stand at $630.980 billion.
The Reserve Bank of India noted that foreign currency assets are expressed in dollar terms and incorporate the valuation effects stemming from the appreciation or depreciation of non-US currencies held within the reserves. Major reserve currencies included in this calculation comprise the euro, the British pound, and the Japanese yen.
The broader contraction in external reserves occurred against a backdrop of global economic turbulence highlighted in the central bank's monthly bulletin. Re-escalating geopolitical tensions in West Asia have recently confronted the global economy with rising energy prices and heightened volatility across financial markets.
While foreign currency assets experienced a substantial outflow during the week ended September 18, other components of the reserve basket showed mixed movements. The value of India's gold reserves increased by $68 million, bringing total gold holdings to $111.292 billion.
Simultaneously, Special Drawing Rights decreased by $106 million to $18.739 billion, while India's reserve position with the International Monetary Fund remained steady at $4.89 billion. Despite the weekly contraction, the central bank's broader economic assessment noted that the external sector has been supported by a moderate current account deficit in the first quarter of fiscal 2026-27 alongside strong foreign direct investment inflows.
