India's forex reserves fall $4.9 bn due to decline in gold holdings

India's foreign exchange reserves dropped by $4.9 billion to $685.7 billion in the week ended May 16 due to a sharp $5.1 billion decline in gold reserves

India’s foreign exchange reserves fell by $4.9 billion in the week ended 16 May, primarily due to a decline in gold reserves, according to the latest data released by the Reserve Bank of India (RBI). Gold reserves alone declined by $5.1 billion during the week.

 

The total reserves stood at $685.7 billion as of 16 May. In the preceding week, the reserves had increased by $4.5 billion to $690 billion.

 

The reserves had reached an all-time high of $705 billion in the last week of September 2024. 

 

Experts attributed the decline to revaluation losses following a fall in global gold prices. Gold prices dropped 3.6 per cent to $3,203 per ounce during the week.

 

“There was a revaluation loss of $3.4 billion due to the fall in gold prices, and a small amount of selling by the RBI in the spot market,” said Gaura Sen Gupta, Chief Economist at IDFC FIRST Bank. 

 

Foreign currency assets increased by $279 million in the reporting week.

 

The rupee appreciated by 0.1 per cent during the same period.

 

Special Drawing Rights (SDRs) declined by $43 million to $18.4 billion. India’s reserve position with the International Monetary Fund (IMF) was also lower by $3 million at $4.3 billion in the reporting week.