India’s foreign exchange reserves declined by $7.511 billion to $681.384 billion for the week ended May 22, according to the latest data released by the Reserve Bank of India. This marks the second consecutive weekly decline and takes the country’s forex reserves to their lowest level in more than a year.
Key Highlights
Forex Reserves Continue to Fall
- Total reserves fell from $688.894 billion in the previous week to $681.384 billion.
- India’s reserves had touched a record high of $728.494 billion in late February 2026 before coming under pressure from global developments.
Gold Reserves See Biggest Decline
The sharpest fall came from India’s gold holdings:
- Gold reserves decreased by $4.53 billion.
- Total gold reserves now stand at $114.786 billion.
Foreign Currency Assets Drop
Foreign Currency Assets (FCAs), the largest component of forex reserves, also declined:
- FCAs fell by $2.872 billion.
- Current FCA holdings stand at $543.032 billion.
These assets include holdings in currencies such as the euro, pound sterling, and Japanese yen, whose values fluctuate against the US dollar.
Why Are Reserves Falling?
RBI Intervention to Support the Rupee
The RBI has reportedly been selling dollars in the foreign exchange market to stabilize the rupee amid volatility caused by geopolitical tensions and rising energy prices.
The rupee came under pressure during the recent Middle East crisis, briefly weakening to record lows before recovering through central bank intervention.
Impact of Global Uncertainty
Several factors have contributed to reserve depletion:
- Higher crude oil prices.
- Increased demand for dollars.
- Capital flow volatility.
- Geopolitical tensions affecting global markets.
Other Components Also Declined
- Special Drawing Rights (SDRs) fell by $77 million to $18.748 billion.
- India’s reserve position with the International Monetary Fund declined by $33 million to $4.818 billion.
Government’s Response
Narendra Modi has urged citizens to help conserve foreign exchange by:
- Reducing unnecessary foreign travel.
- Limiting fuel consumption.
- Avoiding gold purchases for a period.
Why Forex Reserves Matter
Foreign exchange reserves act as a financial buffer that helps:
- Stabilize the currency during market volatility.
- Pay for imports such as crude oil.
- Meet external debt obligations.
- Maintain investor confidence.
Despite the recent decline, India’s forex reserves remain among the largest in the world and continue to provide a significant cushion against external economic shocks.