June 6, 2025 – In a notable development, India foreign exchange (forex) reserves have witnessed a sharp decline of $1.24 billion in just one week, raising eyebrows across financial markets.
According to the latest data released by the Reserve Bank of India (RBI), the country’s forex reserves fell to $691.49 billion for the week ending May 30, 2025.
This fall comes on the heels of a strong performance in the previous week, when India’s forex reserves had surged by nearly $7 billion, pushing optimism about the country’s external buffer. However, the latest dip has slightly dampened that sentiment, although experts believe India remains in a strong position.
The Reserve Bank of India stated that despite the weekly decline, India’s forex reserves are still robust and resilient, sufficient to cover over 11 months of goods imports and approximately 96% of the nation’s outstanding external debt — indicators that point to a stable macroeconomic footing.
A detailed breakdown of the decline reveals that the foreign currency assets (FCA), the largest component of forex, dipped by $1.95 billion, settling at $584.22 billion. On the other hand, there was a silver lining: India’s gold reserves rose significantly by $723 million, reaching $84.31 billion, adding some shine to an otherwise bearish trend.
Other components of the reserves also saw minor movements. The Special Drawing Rights (SDRs), an international reserve asset created by the IMF, slipped by $2 million to $18.57 billion. Meanwhile, India’s IMF reserve position also edged down by $6 million, now standing at $4.40 billion.
Although the sudden dip in forex reserves has caught attention, analysts suggest it may be due to market interventions or external payments rather than a fundamental weakness. India’s forex position remains one of the strongest among emerging markets, and the RBI is expected to continue managing its forex war chest prudently amidst global uncertainties.