According to data released by the Reserve Bank of India (RBI), India’s foreign-exchange reserves fell by approximately USD 5.6 billion during the week ended October 31, 2025, bringing the total reserves to USD 689.73 billion.
What Caused the Decline
The drop in reserves comes amid multiple influences. Major components such as foreign currency assets and gold holdings recorded declines:
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Foreign currency assets (FCA), which form a large part of the reserves, fell by nearly USD 1.96 billion.
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The value of India’s gold reserves declined by around USD 3.81 billion in the same period.
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The decrease may reflect a combination of currency-market interventions by the RBI, valuation changes of foreign assets and global commodity price movement.
Why It Matters for Investors and Markets
While the reserves remain at a high level, the drop signals a few key considerations for investors, wealth-managers and advisors:
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A falling reserve corpus could reduce the cushion available to absorb external shocks such as sharp currency depreciation, sudden capital outflows or a large import bill.
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The change may influence currency stability, as reserves form a part of the external-sector defence mechanism. Investors with exposure to import-heavy or FX-sensitive sectors should monitor rupee movements and hedge risk appropriately.
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From a portfolio standpoint, the easing of reserves may not trigger immediate change, but it acts as a reminder of external-sector risk in a growth-oriented investment strategy.
Strategic Outlook
Going forward, investors and advisors should keep an eye on:
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Weekly reserve data: Significant or sustained declines may indicate stress in external flows or interventions.
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Rupee-exchange movements alongside reserves: A correlation may suggest central-bank activity to stabilise the currency.
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Import bill and commodity price trends (especially gold and oil), which impact reserves via valuation and outgo.
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Investment themes less exposed to currency or external-flow risk — for example, domestic-demand-driven stocks rather than externally-sensitive plays.
India’s forex reserves have decreased by roughly USD 5.6 billion in the week to October 31, 2025, taking the total to about USD 689.73 billion. While the level remains robust, the decline flags the need for caution around currency and external-sector risk in portfolios.
Source: The Economic Times