India's Forex Reserves Continue to Decline

India's foreign exchange reserves have experienced a second consecutive weekly decline, dropping by $3.06 billion to $696.67 billion for the week ended July 11, as per the latest data released by the Reserve Bank of India (RBI).

Key Components Affecting the Reserves

The foreign currency assets, a major part of the reserves, saw a reduction of $2.477 billion to $588.81 billion. Additionally, gold reserves decreased by $498 million to $84.348 billion, and Special Drawing Rights (SDRs) with the IMF fell by $66 million to $18.802 billion.

Global Trends and India's Position

Globally, central banks are bolstering their gold holdings as a secure asset. India has doubled its gold proportion in forex reserves since 2021. Despite recent declines, India's reserves saw a significant increase in 2023 and reached a record high in September 2024.

Resilience of India's External Sector

Governor Sanjay Malhotra highlighted the resilience of India's external sector, with reserves covering 11 months of imports and 96% of external debt, showcasing strong economic fundamentals.