India’s foreign exchange reserves fell by $11.68 billion to $716.81 billion in the week ended March 6, marking the biggest weekly decline in over a year as the central bank sold dollars to defend the rupee
India’s foreign exchange reserves recorded their sharpest weekly decline in more than a year, dropping by $11.68 billion to $716.81 billion in the week ended March 6, according to data released by the Reserve Bank of India on Friday.
The fall from $728.49 billion in the previous week reflects heavy intervention by the central bank in currency markets, as policymakers sold dollars to support the rupee amid global financial volatility and a surge in crude oil prices linked to the ongoing conflict involving Iran.
Analysts said the decline was driven by a combination of active dollar sales by the central bank and valuation losses on reserve assets due to global market movements.
According to Gaura Sen Gupta, economist at IDFC FIRST Bank, the fall in reserves reflected both market intervention and changes in asset valuations.
“The decline in reserves included net dollar sales of about $6.1 billion by the RBI and valuation losses of roughly $5.4 billion,” she told Reuters, adding that the central bank sterilised the liquidity impact of the dollar sales through on-screen bond purchases.
A significant portion of the decline came from foreign currency assets, which form the largest component of India’s reserves. These fell by $9.8 billion during the week to $563.25 billion.
Gold reserves also declined, dropping by $1.6 billion to $130.02 billion.
During the week ended March 6, Special Drawing Rights stood at $18.72 billion, while the Reserve Tranche Position with the IMF was recorded at $4.83 billion.
Despite the latest decline, India continues to hold one of the world’s largest foreign exchange reserve buffers, which policymakers often deploy to manage currency volatility and maintain financial stability.
The rupee has faced pressure in recent weeks amid higher global oil prices and stronger US bond yields, which tend to pull capital flows toward dollar-denominated assets and weigh on emerging market currencies.
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