India’s foreign exchange reserves witnessed a sharp decline during the week ended June 12, 2026, with the country's reserve stockpile falling by nearly $10 billion, primarily due to a steep drop in the valuation of gold holdings, according to data released by the Reserve Bank of India (RBI).
Key Highlights
- India's forex exchange reserves declined by nearly $10 billion to $671.625 billion this week.
- Gold holdings fell sharply, offsetting gains recorded in foreign currency assets.
The RBI reported that India's foreign exchange reserves stood at $671.625 billion, down $9.985 billion from the previous week's level of $681.610 billion. The latest decline follows a relatively modest fall of $711 million recorded in the preceding week.
Gold Reserves Drive Overall Decline
The biggest contributor to the decline was a sharp reduction in the value of India's gold reserves. RBI data showed that the value of gold holdings dropped by $10.754 billion during the reporting week, bringing the country's total gold reserves to $103.821 billion.
The fall in gold valuations more than offset gains in other reserve components, resulting in the overall contraction in the country's foreign exchange reserves. Analysts note that fluctuations in global gold prices can significantly impact the valuation of central bank gold holdings, even when physical stock levels remain unchanged. Earlier this month, the RBI clarified that its physical gold holdings had not changed despite speculation regarding gold sales.
Also Read: Gold Heads for Third Weekly Loss: What It Means for Indian Buyers?
Foreign Currency Assets Register Gains
Providing some support to the reserve position, Foreign Currency Assets (FCAs) - the largest component of India's foreign exchange reserves - increased by $846 million during the week to reach $544.290 billion.
FCAs comprise holdings of major foreign currencies and are influenced not only by reserve accumulation but also by valuation changes arising from fluctuations in currencies such as the euro, pound sterling, and Japanese yen against the US dollar. As a result, movements in global currency markets can affect the reported value of India's foreign currency assets.
SDRs and IMF Position Edge Lower
Other components of the reserve basket also recorded marginal declines. The value of India's Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) declined by $66 million to $18.699 billion, while the country's reserve tranche position with the IMF slipped by $11 million to $4.815 billion.
Why Forex Reserves Matter
Foreign exchange reserves serve as a critical buffer against external economic shocks, helping stabilize the rupee, finance imports, and maintain investor confidence. Despite the latest decline, India continues to hold one of the world's largest forex reserve stockpiles, providing a strong cushion against global financial volatility.
