New Delhi, June 13, 2026 — India’s foreign exchange reserves fell by $711 million to $681.610 billion during the week ended June 5, marking a decline primarily driven by a sharp drop in foreign currency assets, according to Reserve Bank of India data released on Friday.
Key Forex Reserve Figures
| Component | Amount | Weekly Change |
|---|---|---|
| Total Forex Reserves | $681.610 billion | -$711 million |
| Foreign Currency Assets (FCA) | Reduced | Significant decline |
| Gold Reserves | ~$122 billion | +~$2 billion |
| Previous Week | $682.320 billion | +$938 million |
The decline represents a reversal from the previous week when reserves had increased by $938 million, highlighting the volatility in India’s forex position.
Why Did Reserves Fall?
Foreign Currency Assets Hit Hard
The primary driver of the decline was a sharp decrease in foreign currency assets (FCA), which outweighed gains in other reserve components. Foreign currency assets typically include deposits and securities held in major currencies like the US dollar, euro, and yen.
Gold Reserves Show Strong Performance
Despite the overall decline, India’s gold reserves increased by approximately $2 billion during the week, continuing their upward trajectory. This gold accumulation aligns with India’s broader strategy of diversifying forex reserves amid global economic uncertainty.
Context: Record High vs Current Position
India’s forex reserves had touched an all-time high of $728.494 billion during the week ended February 27, 2026. The current level of $681.61 billion represents a decline of approximately $46.88 billion from that peak.
Timeline of Recent Forex Movements
RBI’s Role in Forex Management
The Reserve Bank of India actively manages forex reserves to maintain currency stability and manage external shocks. Earlier in 2026, the Middle East conflict triggered pressure on the rupee, prompting the RBI to intervene through dollar sales, which contributed to the depletion from the all-time high.
Recent RBI Measures to Boost Forex Inflows
The RBI recently announced comprehensive measures to attract dollar inflows, including:
- Expanding hedging benefits for external commercial borrowing
- Broadening the Fully Accessible Route for government bonds
- Exempting Foreign Portfolio Investors from capital gains tax on government securities
These initiatives are expected to draw $30–$50 billion in capital inflows through March 2027, potentially offsetting the recent decline in reserves.
Rupee Strength Despite Reserve Decline
Interestingly, the rupee has shown strength despite the forex decline, climbing to 94.9450 per dollar on Friday, marking its biggest two-month gain. This was largely driven by the RBI’s capital inflow measures announced earlier this week.
Market Implications
Positive Factors:
- Gold reserve accumulation provides diversification benefit
- RBI’s new dollar inflow measures expected to boost reserves
- Rupee appreciation despite reserve decline shows market confidence
Concerning Factors:
- Decline from all-time high raises questions about external position
- Volatile weekly movements indicate global uncertainty
- FCA reduction could signal capital outflow pressures
What Experts Are Saying
Forex Reserve Outlook
The forex reserve position remains healthy and adequate for India’s external financing needs, though the decline from the peak warrants monitoring. The RBI’s recent measures to attract foreign capital should help stabilize and potentially rebuild reserves over the coming months.
Investment Strategy Implications
For investors tracking forex trends:
- Monitor weekly RBI forex data releases for trend signals
- Watch rupee performance against dollar as confidence indicator
- Consider gold exposure as reserve diversification strategy
- Track RBI dollar inflow measures implementation
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