Forex watch: India’s foreign exchange reserves drop to $697.78 billion; gold holdings rise above $100 billion mark

India’s foreign exchange reserves fell by $2.176 billion to $697.784 billion in the week ended October 10, according to data released by the Reserve Bank of India (RBI) on Friday.This marks the second consecutive weekly decline after reserves had dipped by $276 million in the previous week to $699.96 billion.According to RBI data, foreign currency assets (FCA), the largest component of the reserves, fell sharply by $5.60 billion to $572.10 billion. The FCA figures also reflect changes in the value of non-dollar currencies such as the euro, pound, and yen held in the reserves.In contrast, gold reserves rose significantly by $3.60 billion to $102.37 billion, while Special Drawing Rights (SDRs) fell by $130 million to $18.68 billion.India’s reserve position with the IMF also dropped by $36 million to $4.63 billion, the central bank noted.Foreign exchange reserves act as a key buffer against global shocks, including crude price swings, currency volatility, and financial market instability. The RBI uses these reserves to maintain financial stability and support the rupee when required.Meanwhile, the rupee pared early gains and closed 7 paise lower at 88.03 (provisional) against the US dollar on Friday. The local currency opened at 87.91, touched an intraday high of 87.75, but slipped later due to trade tensions and global uncertainty.(With inputs from agencies)