India’s Forex Reserves Dip to $700.2 Billion Amid Decline in Foreign Currency Assets

India’s foreign exchange reserves experienced a decline of $2.334 billion, reaching $700.236 billion for the week ending September 26, 2025, as per data released by the Reserve Bank of India (RBI). This follows a previous week’s dip of $396 million, bringing the reserves to $702.57 billion. The decrease is primarily attributed to a significant drop in foreign currency assets.

Components of the Decline

Foreign currency assets, the largest component of India’s forex reserves, decreased by $4.393 billion to $581.757 billion during the reporting week. These assets are expressed in dollar terms and include the impact of appreciation or depreciation of non-US currencies like the euro, pound, and yen held in India’s reserves.

Gold Reserves See an Increase

In contrast to the decline in foreign currency assets, India’s gold reserves saw a notable increase of $2.238 billion, reaching a total of $95.017 billion. This rise in gold holdings reflects the Reserve Bank of India’s strategy to diversify its reserve assets and hedge against global economic uncertainties.

Other Reserve Components

Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) edged lower by $90 million to $18.789 billion. Additionally, India’s reserve position with the IMF declined by $89 million to $4.673 billion during the same period.

Implications for India’s External Sector

Despite the overall decline in forex reserves, the current level remains substantial. As of September 26, 2025, India’s reserves are sufficient to cover approximately 11 months of merchandise imports and can cover 95.4% of the country’s outstanding external debt as of the end of March 2025. This indicates strong external sector resilience and a healthy buffer against global financial uncertainties.

Conclusion

The recent dip in India’s foreign exchange reserves, primarily due to a decrease in foreign currency assets, highlights the dynamic nature of reserve management. However, the concurrent rise in gold holdings and the substantial level of total reserves underscore the country’s robust economic position and preparedness to navigate global financial fluctuations.