India's foreign exchange reserves declined by $18.34 billion to $747.56 billion for the week ended September 25, marking the third consecutive weekly drop. This latest reduction brings the total decline to $38.15 billion over the past three weeks, following a record high of $785.71 billion reached on September 4.
Market participants attribute the significant depletion in reserves to the Reserve Bank of India's (RBI) active intervention in the foreign exchange market to stabilize the rupee, which has faced downward pressure. The decline also reflects the revaluation of foreign currency assets, as non-dollar currencies like the euro, pound, and yen have weakened against the US dollar. Additionally, rising crude oil prices and higher US Treasury yields have contributed to the volatility affecting emerging-market currencies.
Foreign portfolio investors turned net sellers during September. Excess surplus liquidity prompted the central bank to step up liquidity absorption amid rising crude oil prices.
According to RBI data, the foreign currency assets component, which constitutes the largest portion of the reserves, decreased by $15.57 billion to $615.41 billion. Gold reserves also saw a reduction of $2.59 billion, bringing the total to $108.70 billion. Other components, including Special Drawing Rights (SDRs) and the reserve position with the International Monetary Fund (IMF), also experienced minor declines. Despite this three-week contraction, the current level of $747.56 billion remains a substantial buffer for the economy. Earlier in September, reserves had surged due to heavy inflows from special concessional swap windows for non-resident Indian deposits, which mobilized over $130 billion, though this also increased the central bank's forward dollar liabilities.
According to The Economic Times, for RBI Forex Components Report, Special Drawing Rights held by India decreased by $97 million to $18.64 billion and the IMF reserve position fell by $86 million to $4.8 billion during the week ended September 25, 2026.
