Foreign exchange reserves drop $10.7 billion to $690.43 billion

NEW DELHI — Amid growing geopolitical tensions and FII selling, India’s foreign exchange (forex) reserves dropped $10.746 billion to $690.43 billion for the week ended October 11, data from the Reserve Bank of India (RBI) showed on Friday.

The forex had hit an all-time high of $704.885 billion at the end of September.

In the previous reporting week, the forex had dropped by $3.709 billion to $701.176 billion.

Meanwhile, gold reserves decreased by $98 million to $65.658 billion during the week, according to the Central Bank. For the week ended October 11, the Special Drawing Rights (SDRs) were down by $86 million to $18.339 billion. The country’s reserve position with the International Monetary Fund (IMF) was down by $20 million to $4.333 billion.

Looking ahead, India’s forex reserves are projected to grow. The strong forex will boost its economic growth trajectory by strengthening its position internationally, drawing in foreign investments, and promoting domestic trade and industry.

Strengthened Forex and a strong monetary policy stance are creating confidence among trade and industry and attracting foreign investments amid geopolitical vulnerabilities, according to industry experts.

Meanwhile, the share of gold in the country’s forex has also surged more than 209 per cent since 2018. On Friday, gold prices continued their strong upward momentum, with a sharp rise of INR 500 in MCX, taking the price to INR 77,600, supported by Comex gold surging above $2,710. For 2024, gold has already delivered impressive returns of over 22 per cent, and on a Diwali-to-Diwali basis, returns have reached nearly 30 per cent. This makes gold one of the standout performers for the year. Looking ahead, the price momentum remains strong, with a potential upside target of INR 78,500 in the coming sessions, said experts.