Forex Watch: India’s Foreign Exchange Reserves Take a $9.8 Billion Hit in First Week of 2026

India’s foreign exchange reserves suffered a major setback in the first week of the new year, falling by $9.809 billion after four consecutive weeks of growth.

Sharp Decline in Forex Reserves

Mumbai: The new year began with a jolt for India’s foreign exchange reserves. During the week ending January 2, 2026, the country’s reserves declined by $9.809 billion, reversing the previous week’s gain of $3.29 billion. The total reserves now stand at $686.801 billion. For context, India’s reserves had previously reached a record high of $704.885 billion during the week ending September 27, 2024.

Foreign Currency Assets Fall Significantly

Data released by the Reserve Bank of India (RBI) indicates that India’s Foreign Currency Assets (FCAs) saw a sharp drop of $7.622 billion in the same week. This comes after a modest increase of $184 million the week before, bringing FCAs down to $551.990 billion. Foreign currency assets, expressed in U.S. dollars, include holdings in non-U.S. currencies like the Euro, Pound, and Yen, and form a major component of the country’s overall forex reserves.

Gold Reserves Also Decline

India’s gold reserves recorded a notable reduction as well. During the week ending January 2, the value of RBI’s gold holdings fell by $2.058 billion, after a $2.956 billion increase the previous week. The current value of gold reserves stands at $111.262 billion, with the physical gold stock exceeding 880 tons, accounting for slightly over 14.7% of total forex reserves.

Minor Drops in SDR and IMF Reserves

The RBI data also show a minor decline in Special Drawing Rights (SDRs), which fell by $25 million during the week, following a $60 million rise the week prior. Meanwhile, India’s reserve position with the International Monetary Fund (IMF) decreased by $105 million, bringing it down to $4.771 billion.

This sudden dip in reserves comes as a cautionary note for India’s forex management, following months of steady accumulation. Analysts will closely monitor global and domestic factors that may influence the country’s foreign exchange stability in the coming weeks.