India's forex reserves fall by $18.34 billion to $747.56 billion amid rupee pressure

India's forex reserves dropped $18.343 billion to $747.557 billion during the week ended September 25, the Reserve Bank said on Friday.

In the previous reporting week, the kitty had declined $14.881 billion to $765.901 billion.

The reserves had touched an all-time high of $785.706 billion for the week ended September 4 on the back of a heavy flow of currency as part of a special concessional swap for deposits from the diaspora through which banks raised a record sum of over $130 billion.

For the week ended September 25, foreign currency assets, a major component of reserves, decreased by $15.57 billion to $615.411 billion, according to the data released by the Reserve Bank of India (RBI).

Expressed in dollar terms, the foreign currency assets include effects of appreciation or depreciation of non-US units, such as the euro, pound, and yen, held in foreign exchange reserves.

The value of gold reserves decreased $2.591 billion to $108.701 billion during the week, the RBI said.

The Special Drawing Rights (SDRs) were down $97 million to $18.642 billion, the apex bank said.

India's reserve position with the IMF decreased $86 million and stood at $4.804 billion.

Rupee pressure follows record reserve inflows

The latest decline marks the third consecutive weekly fall in India's foreign exchange reserves. From the record $785.706 billion reached in the week ended September 4, reserves have fallen by around $38.15 billion.

The decline comes amid pressure on the rupee, with higher crude oil prices and US Treasury yields adding to pressure on emerging-market currencies. The RBI has been using its foreign exchange reserves to manage volatility in the currency market.

Crude oil prices averaged around $104 a barrel during the week, while US Treasury yields also rose, according to market reports.

The sharp increase in reserves earlier in September followed three concessional foreign exchange swap windows launched since June 8. The RBI had mobilised more than $143 billion through the windows, with around $133 billion coming through FCNR-B deposits from non-resident Indians.

While the swap transactions boosted reserves, they also created forward dollar obligations for the central bank. The RBI's net forward dollar liabilities rose to around $200 billion in August from nearly $137 billion in July, according to market data.

Despite the recent decline, India's forex reserves stood at $747.557 billion as of September 25, providing a substantial buffer against external and currency-market volatility.