India’s Foreign‑Exchange Reserves Drop $14.9 B to $765.9 B in Week Ending Sept. 18

NEW DELHI — The Reserve Bank of India (RBI) said on Friday that its foreign‑exchange reserves fell by $14.88 billion to $765.90 billion in the week ended 18 September, the steepest decline in two years. The drop follows a period of aggressive rupee support and a surge in foreign‑exchange outflows.

Reserve levels and recent trend

In the preceding week, reserves stood at $780.78 billion, according to the RBI’s weekly statement. The current figure of $765.90 billion represents a 1.9% decline from the previous week and a 3.1% fall from the $794.90 billion level recorded at the end of the previous month.

Drivers of the decline

The RBI’s statement noted that the fall was largely due to a surge in foreign‑exchange outflows as the rupee strengthened against the U.S. dollar. The central bank’s intervention to support the rupee in the early part of the week was followed by a reversal of the trend, with the dollar gaining against the rupee in the last days of the period.

Market analysts point to a combination of factors, including the RBI’s policy rate decisions and global liquidity conditions. The rupee’s recent rally against the dollar, after a 12‑month low, prompted the RBI to intervene in the foreign‑exchange market, which in turn reduced the reserves.

Impact on policy and markets

The RBI has maintained its key repo rate at 6.50% and has not announced any change in its monetary policy stance. The central bank’s statement said that the reserve decline would not affect its ability to meet its liquidity and monetary policy objectives.

Financial markets reacted to the news with a modest tightening in the bond market. The 10‑year Indian government bond yield rose from 6.12% to 6.18% in the days following the RBI’s announcement.

Historical context

Reserve levels have fluctuated in recent months, with a peak of $794.90 billion in early September. The current figure of $765.90 billion is the lowest since the end of 2024, when reserves were $779.20 billion.

In a statement, the RBI said that the reserves are still well above the 2025 target of $700 billion set by the government. The central bank also highlighted that the reserves are sufficient to meet the country’s external obligations.

Reactions from officials

In a press release, the RBI’s deputy governor, Mr. Anil Kumar, said that the reserve decline was a normal market adjustment and that the bank would continue to monitor the situation closely.

Financial analysts from Bloomberg and The Economic Times noted that the decline is part of a broader trend of reserve fluctuations in emerging markets, driven by currency volatility and global interest‑rate moves.

Future outlook

The RBI has not issued a forecast for future reserve levels. However, it has reiterated its commitment to maintaining a stable macro‑economic environment and to supporting the rupee through targeted interventions when necessary.