Forex reserves rise $2.49 billion to $719.55 billion, ending eight weeks of falls, as gold does the lifting

India’s foreign exchange reserves rose $2.491 billion to $719.547 billion in the week ended November 6, the Reserve Bank of India’s weekly data showed on Friday evening. It is the first rise since the record of $785.706 billion in early September, and it ends a run of eight weekly falls that took the pile down to $717.056 billion in the week before.

The increase was small and came almost entirely from one line. Gold reserves rose $2.205 billion to $104.796 billion, which the data attributes to a higher dollar value of the holdings. The biggest component, foreign currency assets, gained only $232 million to $591.350 billion, a change the agencies called marginal. Special Drawing Rights, India’s claim on the International Monetary Fund’s reserve asset, rose $52 million to $18.610 billion, and the reserve position with the IMF edged up $1 million to $4.791 billion.

What the numbers say

Foreign currency assets are held in dollars, euros, pounds and yen, so their dollar value moves with exchange rates as well as with any buying or selling by the central bank. A $232 million gain therefore says little about whether the Reserve Bank was a net buyer or seller of dollars during the week. Gold is valued at market prices, which is why a rally in the metal shows up directly in the total.

In rupee terms the picture was the opposite. Total reserves fell Rs 49,742 crore in the week to Rs 67.59 lakh crore, with foreign currency assets down Rs 58,075 crore and gold up Rs 10,257 crore. The reason is the currency itself: the rupee closed at 93.89 to the dollar on November 6, its strongest close since April, so each dollar was worth fewer rupees than a week earlier. Market reports put it near 94.05 in early trade on Friday.

$785.706 bn

$719.748 bn

$717.056 bn

$719.547 bn

Sep 4 (record)Oct 23Oct 30Nov 6

Forex reserves, $ billion, week ended

Item	Value
Sep 4 (record)	$785.706 bn
Oct 23	$719.748 bn
Oct 30	$717.056 bn
Nov 6	$719.547 bn

How we got here

Reserves hit their all-time high of $785.706 billion in the week ended September 4, after a special concessional swap window for deposits from Indians abroad let banks raise a record $133 billion. They have drifted down since. They fell for a sixth week to $721 billion on October 16, slipped $1.269 billion to $719.748 billion in the week to October 23, and then dropped $2.691 billion to $717.056 billion in the week to October 30.

Analysts have tied the slide to two things: banks putting the money raised through FCNR(B) deposits to use, and the Reserve Bank selling dollars to hold up the rupee while oil stayed above $100 a barrel. Our explainer on how the RBI defends the rupee sets out the mechanics.

The longer view

Even after eight weeks of falls, the reserves are not low. They are $28.44 billion higher than at the end of March and $32.51 billion higher than a year ago. Over the year to date, foreign currency assets are up $39.07 billion while gold holdings are $10.60 billion lower than in March. The current total is still about $66.2 billion below the September peak.

What happens next

The Reserve Bank publishes the figures every Friday. The next release, on November 20, will cover the week to November 13 and show whether the rise was a turn or a pause. The coming weeks will test two things: whether the rupee, which strengthened sharply in the first week of November, holds near 94 without heavy dollar sales, and whether gold keeps its gains. Because the November 6 week saw the rupee’s best run since April and large foreign inflows into Indian shares, the foreign currency line will be watched more closely than the headline total.