India's Forex Reserves Plummet Amidst Rupee Defense

India's foreign exchange reserves have seen a substantial reduction, falling by approximately $60 billion over a six-week period, reaching $726.027 billion by October 9, 2026. This marks a significant decrease from the record high of $785.706 billion observed on September 4, 2026.

The primary driver for this depletion was the Reserve Bank of India's (RBI) aggressive intervention in the currency market to support the Indian rupee, which has faced considerable pressure. The RBI's actions involved selling dollars to stabilize the currency amidst multiple economic challenges.

Key components of the reserves, including foreign currency assets, experienced notable decreases. Foreign currency assets alone fell by $7.142 billion in the week ending October 9, 2026, contributing to a broader six-week decline. India's gold reserves also saw a reduction during the same period.

The headwinds impacting the rupee included rising global crude oil prices, an increase in US yields, and consistent outflows of foreign capital from domestic markets. Foreign portfolio investors had withdrawn a net $26.8 billion from Indian markets year-to-date as of the reporting date.