According to RBI data, India’s foreign exchange reserves fell for the sixth week in a row, reaching a 10-month low of $625.9 billion as of 10th January 2025.

India’s foreign exchange reserves dropped by $8.7 billion in the week ending 10th January 2025, marking the sharpest weekly decline in two months. 

The decline was largely driven by a $9.5 billion drop in foreign currency assets, while gold reserves increased by $792 million. The reserves have now fallen by nearly $80 billion since reaching a peak of $705 billion at the end of September 2024.

The depreciation of the Indian rupee has played a significant role in reducing the reserves. The rupee has fallen 3.2% since 1st October 2024 due to a strong US dollar and weak capital inflows. 

On 17th January, the rupee closed at 86.61/$, marking a weekly decline of 0.74%, its steepest drop in 18 months and its 10th consecutive weekly loss.

Analysts suggest that the Reserve Bank of India (RBI) has been cautious in using its reserves to control currency volatility, especially in the face of strong global challenges. The forex reserves include India’s position in the International Monetary Fund (IMF).

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