India's foreign exchange reserves witnessed a decline for the second consecutive week, dropping by $1.8 billion to settle at $686.2 billion for the week ending November 28, 2025. The latest data from the Reserve Bank of India (RBI) shows the dip follows a sharper fall of $4.4 billion in the prior week, indicating a continued downtrend in the country's forex buffer.
Key Components Show Mixed Movement
The overall decline was primarily driven by a significant reduction in foreign currency assets (FCA), which form the largest part of the reserves. According to the RBI's Weekly Statistical Supplement, the FCA component decreased by $3.5 billion to reach $557 billion in the reporting week ending November 28.
In a contrasting trend, the value of India's gold reserves moved higher. The central bank reported that gold reserves increased by $1.6 billion during the week, taking the total value to $105.7 billion. This rise aligns with a global surge in gold prices, fueled by robust investment demand and heightened geopolitical uncertainties.
Other Reserve Holdings and Annual Trends
Beyond foreign currency and gold, the nation's forex reserves include other components. The data shows that Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by $63 million to $18.62 billion. Similarly, India's reserve position within the IMF also saw a modest rise of $16 million, settling at $4.7 billion.
Looking at the broader annual picture, India's forex kitty has seen considerable volatility in recent years:
- In 2022, reserves saw a cumulative decline of $71 billion.
- 2023 witnessed a strong recovery with an addition of around $58 billion.
- The reserves grew by a little over $20 billion in 2024.
- So far in 2025, the reserves have cumulatively increased by approximately $48 billion.
Role of RBI and Purpose of Forex Reserves
Foreign exchange reserves are crucial assets held by a nation's central bank, primarily in currencies like the US Dollar, Euro, Yen, and Pound Sterling. The RBI actively manages these reserves, often intervening in currency markets to curb excessive volatility. The central bank typically buys US dollars when the Indian rupee is strong and sells them to support the currency during periods of weakness.
The decision to adjust gold holdings, as seen in the recent increase, is a strategic one taken by the central bank based on factors like global economic uncertainty and market conditions. The recent weekly data underscores the dynamic nature of India's external sector management as the RBI balances multiple objectives to ensure financial stability.
