As of the week ending February 28, India’s foreign exchange reserves had dropped to $638.698 billion, an 11-month low. This $1.781 billion decline is part of an erratic pattern in which reserves have experienced both gains and losses in recent weeks.
The Reserve Bank of India’s (RBI) intervention to stabilise the Indian Rupee, which has fallen close to its all-time low vs the US dollar, is mostly to blame for the decline.
Since reaching a peak of $704.89 billion in September—a drop of almost 10%—the reserves have been declining.
Gold reserves were worth $73.272 billion, while foreign currency assets, which made up the majority of the reserves, were valued at $543.350 billion.
Estimates indicate that India’s foreign exchange reserves are still enough to fund roughly 10–11 months’ worth of anticipated imports, notwithstanding the recent decrease.
After declining by $71 billion in 2022, India’s foreign exchange reserves increased by about $58 billion in 2023. The reserves increased by slightly more than $20 billion in 2024.
To keep the Rupee’s exchange rate stable, the RBI strategically buys and sells dollars as part of its management of its foreign exchange reserves.
