The country’s total reserves fell by $11.68 billion to $716.8 billion, from $728.4 billion in the previous week ended February 27.
The move in stocks comes at a time when the Indian rupee is experiencing high volatility, with the currency recently hitting record lows against the US dollar. The rupee’s pressure is partly linked to ongoing geopolitical tensions over the US-Israeli-Iran war, which has contributed to volatility in global energy markets.
India, which is heavily dependent on imported energy, has faced concerns over oil and LPG supplies in particular, as rising crude prices widen the country’s trade deficit and increase demand for the dollar. This dynamic has added a downward bias to the rupee, prompting the Reserve Bank of India to occasionally intervene in currency markets to reduce volatility, often reducing reserves in the process.
Foreign currency assets (FCA) – the largest component of India’s reserves – fell to $519 billion from $9.88 billion during the week. These assets consist largely of foreign currencies such as US dollars, euros, pounds sterling and yen, and their value can fluctuate due to movements in international exchange rates.
Gold reserves also decreased by 1.6 billion dollars to 471 billion dollars. The decline reflects both value fluctuations amid softening global gold prices and the central bank’s continued efforts to rebalance and diversify its reserve portfolio.
Despite the weekly decline, India’s external buffers remain strong. The country’s foreign exchange reserves are still close to their historic highs and can cover imports for about 10 months, providing significant resilience against external shocks.
