India's Forex Reserves Experience Continued Decline Amid Geopolitical Tensions

India's foreign exchange reserves have seen a significant decline for the second consecutive week, dropping by $7.511 billion amid ongoing geopolitical tensions and central bank interventions. The Reserve Bank of India reported that foreign currency assets and gold reserves have both decreased, reflecting the impact of global market fluctuations. As the rupee faces pressure, the RBI's actions to stabilize the currency are crucial. This article delves into the details of the forex reserves, including the factors contributing to their decline and the implications for the Indian economy.

By Narendra Chaudhary May 29, 2026, 19:06 IST

Ongoing Decline in Forex Reserves

India's foreign exchange reserves have faced a downturn for the second week in a row, indicating strain on the rupee due to persistent geopolitical instability and interventions by the central bank in the currency market. Data from the Reserve Bank of India (RBI) released on Friday revealed that the forex reserves fell by $7.511 billion, bringing the total to $681.384 billion for the week ending May 22. This decline follows a significant drop of $8.094 billion from the previous week, where reserves had decreased to $688.894 billion. Earlier, India's forex reserves had reached an all-time high of $728.494 billion during the week ending February 27. However, recent tensions in the Middle East have led to increased pressure, prompting the RBI to sell dollars to help stabilize the rupee.

Decline in Foreign Currency Assets

The foreign currency assets (FCAs), which constitute the largest segment of India's forex reserves, experienced a considerable decrease during this reporting period. According to RBI data, FCAs fell by $2.872 billion, totaling $543.032 billion. These assets are held in various foreign currencies and are reported in dollar terms. Their valuation is affected not only by RBI actions but also by changes in global currencies such as the euro, pound sterling, and Japanese yen. The recent fluctuations in global markets and movements in major currencies have further impacted the valuation of reserves.

Gold Reserves Also Decline

India's gold reserves have similarly seen a significant drop during the reviewed week. The value of gold holdings decreased by $4.53 billion, now standing at $114.786 billion, which has notably contributed to the overall reduction in reserves. Additionally, the country's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) also saw a slight decline, dropping by $77 million to $18.748 billion. Furthermore, India's reserve position with the IMF decreased by $33 million, now totaling $4.818 billion, as per the latest figures from the central bank.