India’s Forex Reserves Fall for Fourth Week to $734.6 Billion as Rupee Nears Record Low
Foreign exchange reserves dropped by $12.95 billion in the week to 2 October, while the rupee traded close to its record low of 96.97 per dollar, according to reports.
India’s foreign exchange reserves fell for a fourth consecutive week, dropping by $12.95 billion to $734.6 billion in the week ended 2 October, according to Business Standard. The decline follows a record of $785.7 billion in the week ended 4 September, which means reserves have shed about $51.1 billion in a month. The week ended 25 September had seen the largest weekly fall on record, of $18.3 billion, to $747.6 billion.
Foreign currency assets, the biggest component, fell by $10.7 billion to $604.7 billion, while gold reserves declined by $2.3 billion to $106.4 billion. Special Drawing Rights rose marginally to $18.7 billion, and the reserve position with the International Monetary Fund eased to $4.8 billion. Business Standard reported that gold fell 2.5 per cent to $4,177 an ounce and the dollar index rose 1.12 per cent to 102.10 over the period, which reduced the dollar value of non-dollar assets and bullion.
The Reserve Bank of India has also been selling dollars to defend the rupee while Brent crude traded above $100 a barrel and foreign investors continued to withdraw money. Market estimates cited by Business Standard put net dollar sales in September at about $30 billion. The central bank has used spot sales and sell-buy swaps in the forward market, Business Today reported.
The rupee was quoted at around 96.68 to 97 per dollar, roughly 0.2 per cent away from its record low of 96.97 set in May, and has weakened by more than 7 per cent so far in 2026, Business Today said. It attributed the pressure to expensive crude, rising global bond yields and continued foreign portfolio outflows, with foreign investors having sold almost $30 billion of Indian equities this year.
Governor Sanjay Malhotra has said reserves are adequate. Business Standard quoted him as saying India holds about 11 months of import cover and reserves equal to 94.4 per cent of external debt. Business Today reported that he also said the rupee may be undervalued and that markets can behave irrationally in the short term.
Analysts were cautious about what policy alone can achieve. Sakshi Gupta, an economist at HDFC Bank, said interest rate increases are a weak short-term defence for the currency because it is driven by oil, equity valuations, foreign outflows and dollar strength, according to Business Today. HDFC Bank expects the rupee to trade in a range of 96 to 98 per dollar in the second half of the financial year, while Mecklai Financial Services said a break above 97 could take it towards 98.50.
The reserves had earlier fallen to $666.9 billion in the week ended 26 June during the West Asia crisis before recovering, helped by a concessional swap window for FCNR(B) deposits that brought in $143.6 billion between 8 June and 31 August, as counted by 18 September, Business Standard reported. The next weekly reserves figure from the RBI will show whether the decline has continued.
