India’s forex reserves fall to $686 billion, down $2 billion as of May 2

India’s forex reserves dropped $2.06 billion to $686.06 billion for the week ending May 2, snapping an eight-week gaining streak that had lifted reserves to a near six-month high, according to data by the Reserve Bank of India on Friday. In the previous reporting week, the overall kitty had increased USD 1.983 billion to USD 688.129 billion.

The forex reserves had touched an all-time high of $704.885 billion in end-September 2024.

For the week ended May 2, foreign currency assets, a major component of the reserves, increased $514 million to $581.177 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 $2.545 million to $81.82 billion during the week, the RBI said. The special drawing rights were down $30 million to $18.558 billion, the central bank said. India’s reserve position with the IMF was also down $3 million at $4.509 billion in the reporting week, the apex bank data showed.

India’s forex kitty
Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.