Forex Reserves Fall For Third Straight Week To $644 Billion, Lowest Since May

India's foreign exchange reserves fell for the third straight week to $644.39 billion for the week ended Dec. 20, according to data from the Reserve Bank of India on Friday. This is the lowest level since May 3.

The country's forex kitty fell $8.48 billion over the previous reporting week. In the previous reporting week, the reserves had dropped $2 billion to $652.8 billion.

The decline can be attributed to robust a central-bank intervention in the currency market to support the rupee amid a strong dollar. The RBI typically sells dollars from its reserves when the local currency is under pressure to curb excessive volatility.

The rupee weakened 53 paise to a record low of 85.79 against the US dollar on Friday, posting its steepest single-day decline since February 2023. However, the worst is not over for the rupee, according to analysts and economists. Uncertainty is expected to heighten in 2025 as US President-elect Donald Trump threatens tariff and adopts inflationary policies.

The Indian currency is expected to move in the broad range of 83.20–87.00 against the greenback in 2025.

December has seen Rs 29,240 crore make its way into Indian bonds and equities, while in November, the FPIs pulled Rs 21,444 crore out of the Indian markets.

For the week ended Dec. 20, foreign currency assets—a major component of the reserves—fell to $556.56 billion, according to the RBI data.

In dollar terms, foreign currency assets include the effect of the appreciation or depreciation of non-US units like the euro, pound, and yen held in foreign exchange reserves. Gold reserves decreased to $65.73 billion during the week.