Forex reserves: India’s holdings fall $5.6 billion; gold and dollar assets decline sharply

India’s foreign exchange reserves dropped by $5.623 billion in the week ending October 31, reaching $689.733 billion, according to the Reserve Bank of India’s latest figures. The fall was driven by declines in both foreign currency assets and gold holdings.Foreign currency assets, the largest portion of the reserves, fell by $1.957 billion to $564.591 billion. Gold reserves saw a sharper decrease, slipping $3.810 billion to $101.726 billion. Analysts note that the price of gold has been rising steadily in recent months amid global uncertainties and strong investment demand.Despite the decline, the reserves remain close to their all-time high of $704.89 billion recorded in September 2024. Over the past month, the forex kitty has generally been on a downward trend, with only one week of marginal gains.RBI Governor Sanjay Malhotra, following the central bank’s recent monetary policy review, said that the foreign exchange reserves are sufficient to cover more than 11 months of merchandise imports. Additionally, India’s external sector remains resilient, and the RBI is confident of meeting the country’s external obligations comfortably.Historically, India’s forex reserves have grown steadily. In 2023, the country added approximately $58 billion, reversing a cumulative decline of $71 billion in 2022. In 2024, reserves rose by just over $20 billion, and so far in 2025, they have increased by around $40 billion.Foreign exchange reserves, held by the RBI, consist primarily of major reserve currencies such as the US dollar, with smaller holdings in the euro, Japanese yen, and pound sterling. The central bank actively manages these reserves, buying dollars when the rupee is strong and selling them when it weakens, helping to maintain currency stability.