India’s foreign exchange reserves took another hit this week, sliding for the second week in a row as the Reserve Bank of India kept up its defence of the rupee amid elevated crude oil prices and a nervous global market. Fresh data released by the central bank on Friday shows the reserves fell by $8.58 billion to $726.03 billion in the week ended October 9.
The drop follows an even steeper fall of $12.95 billion in the previous week, taking the total erosion over two weeks to more than $21 billion. The reserves had touched an all-time high of $785.7 billion for the week ended September 4, and have been on a declining trend ever since.
Where the reserves went
Foreign currency assets, the largest component of the reserves, dropped by $7.14 billion to $597.61 billion during the week. These figures include the effect of the appreciation or depreciation of other currencies like the euro, pound and yen held in the kitty.
The value of gold reserves declined by $1.32 billion to $105.09 billion, while Special Drawing Rights with the International Monetary Fund fell by $109 million to $18.55 billion. India’s reserve position with the IMF slipped by $10 million to $4.78 billion.
Why the fall matters
The slide in reserves is largely seen as the cost of the RBI’s market interventions to stabilise the rupee. The currency has been under pressure as global crude oil prices hold above $105 a barrel, pushing up India’s import bill and widening the trade deficit.
According to an ICICI Bank Global Markets report, India’s merchandise trade deficit could reach $388 billion if crude averages around $95 a barrel over the year, potentially pushing the current account deficit to $57 billion, or 1.4 per cent of GDP.
The rupee ended this week at 94.96 against the US dollar, up 0.1 per cent from the previous close of 95.05. Earlier this month, the RBI opened a special dollar window for oil marketing companies to reduce dollar demand in the market, a step widely read as part of its rupee defence toolkit.
From record high to steady drain
The September record was driven by a heavy flow of currency as part of a special concessional swap for deposits from the Indian diaspora, through which banks raised a record sum of nearly $133 billion. Since that inflow peaked, the reserves have been steadily declining as the central bank sold dollars to cushion the rupee.
Even after the recent slide, India’s reserves remain the fourth largest in the world and provide cover for close to a year of imports, according to economists. That cushion gives the RBI room to keep smoothing volatility in the currency market without hitting panic levels.
What to watch next
Market watchers will now be tracking two things: the trajectory of crude oil prices and the RBI’s appetite for further intervention. There are early signs of relief, with reports that the US may ease sanctions on shadow fleet tankers to lower shipping costs, and the International Energy Agency signalling accelerated emergency stock releases.
Still, fresh Iranian attacks on vessels in the Strait of Hormuz and ongoing clashes between Saudi Arabia and Yemen’s Houthis have kept a geopolitical risk premium embedded in oil prices. For India, which imports most of its crude, that premium translates directly into pressure on the rupee, fuel costs and household budgets.
FAQs
What are India’s forex reserves now?
India’s foreign exchange reserves stood at $726.03 billion in the week ended October 9, 2026, down $8.58 billion from the previous week, according to RBI data released on Friday.
Why are India’s forex reserves falling?
The decline is mainly due to the RBI selling dollars in the market to defend the rupee against depreciation, along with valuation changes in foreign currency assets and gold.
When did India’s reserves touch a record high?
The reserves hit an all-time high of $785.7 billion for the week ended September 4, 2026, helped by a special concessional swap for diaspora deposits.
How much have reserves fallen since the record?
The reserves have declined by roughly $59.7 billion from the September 4 record, including a $21.5 billion fall over the last two weeks alone.
Does the fall signal trouble for the economy?
Not yet. Economists say the reserves still cover close to a year of imports, giving the RBI ample room to manage currency volatility. The trend bears watching if crude stays elevated.
Stay with Informeia for the latest updates on India’s economy, markets and policy. The RBI releases forex reserves data every Friday, and we track each release for what it means for your money.
