India's Forex Reserves Drop By $1.9 Billion, Hit Near 6-Month Low

India's reserve position with the International Monetary Fund (IMF) decreased by $27 million during the reporting week, reaching $4.240 billion

India's foreign exchange reserves decreased by $1.9 billion to $653 billion in the week ending December 13, marking a six-month low, according to the latest data from the Reserve Bank of India. This is the lowest level since June 28. The decline in total reserves was primarily due to a $3 billion drop in foreign currency assets during the week.

In comparison, the reserves stood at $655 billion in the week ending December 6, reflecting a decrease of $3.2 billion.

Meanwhile, gold reserves rose by $1.1 billion during the same period, while special drawing rights (SDRs) declined by $35 million to $17.997 billion. India's reserve position with the International Monetary Fund (IMF) decreased by $27 million during the reporting week, reaching $4.240 billion. India's foreign exchange reserves had reached a record high of $705 billion in the week ending September 27.

However, reserves have declined by $52 billion in the current quarter, primarily due to revaluation effects and the Reserve Bank of India's (RBI) interventions in the foreign exchange market through dollar sales as the rupee remains under pressure during the period. On Thursday, the rupee crossed the psychologically significant 85-per-dollar mark, continuing its depreciation trend as the dollar index strengthens. The central bank has been intervening on both sides of the market to manage excessive volatility in the exchange rate.

The Indian rupee depreciated slightly by 0.1 per cent last week, reflecting ongoing pressures in the foreign exchange market.

So far this calendar year, the rupee has weakened by 2.13 per cent, reflecting the broader trend of currency depreciation amid global economic uncertainties. In the current financial year, the rupee has fallen by 1.90 per cent, signalling continued challenges for the local currency. Additionally, the rupee depreciated by 0.62 per cent in December, further highlighting the ongoing downward pressure on the currency.