India’s foreign exchange (forex) reserves fell by $1.988 billion to $652.869 billion for the week ending December 13, 2024, according to data released by the Reserve Bank of India (RBI) on Friday. This marks the continuation of a downward trend, as the reserves had already declined by $3.235 billion in the preceding week, when they stood at $654.857 billion.

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The consistent decline in forex reserves in recent weeks has been attributed to revaluation effects and the RBI’s interventions in the foreign exchange market to stabilize the rupee amid ongoing volatility. Despite the drop, India’s reserves remain one of the largest globally, although they are now significantly lower than the all-time high of $704.885 billion recorded in September 2024.

A deeper look into the composition of the reserves reveals that foreign currency assets (FCA)—a major component—fell by $3.047 billion during the week, standing at $562.576 billion. These assets, expressed in U.S. dollar terms, are impacted by changes in the value of non-dollar currencies such as the euro, yen, and pound held within the reserves.

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Additionally, the data showed a decline in India’s reserve position with the International Monetary Fund (IMF), which decreased by $27 million to $4.24 billion.

The forex reserves serve as a crucial buffer for India’s economy, enabling the RBI to manage exchange rate volatility, meet external payment obligations, and ensure stability during global economic disruptions. However, the recent decline highlights the challenges posed by global economic uncertainties and capital outflows.

The rupee has faced pressures in recent weeks due to various factors, including global interest rate adjustments, fluctuating crude oil prices, and geopolitical uncertainties. In response, the RBI has been actively intervening in the forex markets to curb excessive volatility and maintain orderly exchange rate movements.