Forex reserves fall $53 billion from February peak; Govt says buffers remain adequate

India's foreign exchange reserves have declined by more than $53 billion from their all-time high in late February this year, but the government on Tuesday asserted that the country's external buffers remain adequate and continue to provide a strong cushion against global uncertainties.

Replying to a question in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said India's total foreign exchange reserves stood at $675.16 billion as on July 10, 2026, compared with a peak of $728.49 billion recorded on February 27, reflecting a decline of around $53.34 billion over the period.

The fall was led by a reduction in foreign currency assets, which dropped to $546.51 billion from $573.13 billion, while gold reserves declined sharply to $105.23 billion from $131.63 billion. Holdings of Special Drawing Rights (SDRs) and the Reserve Tranche Position also witnessed marginal declines during the period.

The government said movements in foreign exchange reserves are influenced by several factors, including the Reserve Bank of India's purchase and sale of foreign exchange, income earned on reserve assets, external aid receipts of the Centre and valuation changes in reserve assets.

The statement also highlighted the RBI's interventions in the foreign exchange market amid periods of volatility. Gross sales of US dollars by the central bank amounted to $13.99 billion in February, $29.64 billion in March, $25.17 billion in April and $28.33 billion in May, taking cumulative gross dollar sales to over $97 billion during the four-month period. The government reiterated that the rupee remains market-determined and that the RBI intervenes only to curb excessive volatility, without targeting any specific exchange rate or band.

India's external position remains comfortable

Despite the decline in reserves, the government maintained that India's external position remains comfortable. As of July 10, the country's foreign exchange reserves provided an import cover of 10.3 months of goods, while the ratio of short-term external debt, based on original maturity, to forex reserves stood at 21.6 per cent at the end of March 2026, indicating that reserve adequacy remains well within standard metrics.