India’s foreign exchange reserves dropped to a 10-month low of $625.87 billion as of January 10, marking the sixth consecutive weekly decline, according to data released by the Reserve Bank of India (RBI) on Friday. The reserves fell by $8.72 billion in the week, the steepest decline in two months, extending the cumulative loss to $23.5 billion over the past six weeks.
The reserves are now $79 billion below their all-time high of $704.89 billion, recorded in late September. Changes in the foreign currency assets within the reserves reflect the central bank’s interventions in the forex market and fluctuations in the value of foreign assets.
The RBI actively intervenes in the forex market, through state-run banks, to manage excessive volatility in the rupee. However, the domestic currency has faced persistent downward pressure due to a strong U.S. dollar and subdued capital flows. Despite the central bank’s actions, the rupee has logged notable losses.
During the week ending January 10, the rupee reached a then-record low of 85.97 against the dollar, marking its tenth straight weekly decline. By the end of the trading week, the rupee settled at 86.61 per dollar, registering a 0.6% weekly drop—the sharpest in 18 months.
India’s forex reserves also include its reserve tranche position with the International Monetary Fund (IMF). In light of global economic uncertainties, Reuters reported that the RBI is expected to adopt a more cautious approach in deploying its foreign exchange reserves to stabilize the domestic currency market.