India's Forex Reserves Fall $2.41 Billion to $637.92 Billion; 3rd Consecutive Weekly Decline

India’s forex reserves had hit an all-time high of $648.562 billion during the week ended April 5, following multiple weeks of increases.

In the third consecutive weekly decline, India’s forex reserves dropped $2.412 billion to $637.922 billion during the seven days ended April 26, according to the RBI data. In the previous reporting week, the overall foreign exchange reserves had declined $2.28 billion to $640.33 billion.

For the week ended April 5, the forex reserves had hit an all-time high of $648.562 billion following multiple weeks of increases. The earlier high of $642.453 billion achieved in September 2021 got surpassed in March this year.

For the week ended April 26, the foreign currency assets — a major component of the reserves — decreased $1.159 billion to $559.701 billion, the data released on Friday showed.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves decreased $1.275 billion to $55.533 billion during the week. The special drawing rights (SDRs) were up $15 million to $18.048 billion, said the RBI.

India’s reserve position with the IMF was also up $8 million to $4.639 billion in the reporting week, the apex bank data showed.

Amit Goel, co-founder and chief global strategist at Pace 360, said, “In late April, India’s foreign exchange holdings declined by $2.41 billion, mostly due to the downward revaluation of gold and foreign currency assets. Gold reserves decreased by $1.28 billion, while foreign currency assets dropped by $1.16 billion.”

Foreign institutional investors (FIIs) have been selling Indian equities, with net sales of more than $4 billion in April. This has been largely offset by Foreign Direct Investment (FDI) inflows and inflows from Foreign Portfolio Investors (FPIs) in the Indian bond market, he added.

Sanjeev Agrawal, president of PHD Chamber of Commerce and Industry, said “Amid the geopolitical challenges and uncertain global economic climate, India’s foreign currency reserves stand intact at $637 billion bolstered by strong economic growth trajectory, attractiveness to international investors and robust export growth trajectory.”