Mumbai: India’s foreign exchange reserves continued to decline for the 4th straight week to $684.8 billion in the week ending October 25, 2024, according to RBI data. Last week India’s forex reserves declined by $2.16 billion to $688.26 billion in the week ending October 18, 2024.
The RBI’s weekly statistical supplement documented the weekly decline in India’s forex reserves. Forex reserves are important since they ensure a country’s ability to pay for imports.
Why did India’s forex reserves decline this week?
India’s forex reserves declined this week owing to a $4.48 billion decline in foreign currency assets to $593.75 billion. FCA is the basket of foreign currencies held by the RBI which is expressed in US dollar terms. Out of the total FCAs, $515.30 billion were held in securities, while $60.11 billion was invested with central banks and BIS abroad. Another $41.66 billion was held with commercial banks abroad, according to RBI’s Half Yearly Report on Management of Foreign Exchange Reserves: April – September 2024.
Meanwhile, India’s gold reserves surged $1 billion to $68.5 billion, according to RBI data. Special Drawing Rights were down $52 million to $18.2 billion while India’s reserve position with the IMF stood at $4.3 billion, down $9 million on a weekly basis. India ranks 4th in the world in terms of forex reserves. China, Japan and Switzerland are the top 3 countries in the world in terms of foreign exchange reserves.
Why India’s gold reserves are rising
India’s gold reserves touched 855 million tonnes as of September 30, 2024, as the RBI imported an additional 102 mt of gold from the Bank of England. The move was promoted by the changing global geopolitical scenario. The move is part of RBI’s efforts to bolster India’s forex reserves while ensuring financial stability.
India’s gold reserves are divided between 510.46 mt held domestically and 324.01 mt held abroad with the BoE and the Bank of International Settlements. Another 20.26 mt are held by RBI as gold deposits.
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