Rupee defence drains another $5 billion from RBI's dollar stockpile
By Neha KapoorEconomy Correspondent, Peepals Business
File photo: Vyacheslav Argenberg (CC BY 4.0), via Wikimedia Commons
India's foreign exchange reserves fell about $5 billion to about $721 billion in the week to October 16, RBI data released on October 23, 2026 show.
What Happened
India's foreign exchange reserves fell by about $5 billion to about $721 billion in the week ended October 16, 2026, according to weekly data the Reserve Bank of India released on Friday, October 23. It was the second weekly fall in a row, after a drop of $8.578 billion to $726.027 billion in the week ended October 9. Most of the decline came from the central bank's holdings of foreign currencies, which it has been selling to steady the rupee.
Key Facts
- Total reserves: about $721 billion in the week ended October 16, down about $5 billion in a week.
- Foreign currency assets, the largest part of the reserves, fell $5.758 billion to $591.847 billion.
- Gold reserves rose $706 million to $105.8 billion, helping to cushion the fall.
- Special drawing rights (SDRs), the reserve asset issued by the International Monetary Fund, edged up to $18.578 billion.
- The previous week, reserves had fallen $8.578 billion to $726.027 billion.
- Reserves were at a record $785.706 billion on September 4, so they are now about $65 billion below that peak.
- The rupee closed at 94.81 against the US dollar on October 22, down 43 paise in a day, ending a run of eight straight gains.
Why It Matters
Foreign exchange reserves are the dollars, euros, gold and other assets the Reserve Bank of India holds to pay for imports, meet foreign debt and calm the currency market when it turns volatile. When the rupee weakens quickly, the RBI sells dollars from these reserves in the market. That supplies the dollars importers and investors want and slows the rupee's fall. The cost shows up in the weekly reserve numbers.
The latest data fit that pattern. The fall in foreign currency assets ($5.758 billion) was larger than the fall in total reserves, because the value of gold holdings rose during the week. Foreign currency assets are also affected by changes in the value of the euro, pound and yen the RBI holds, so not every dollar of the decline is a direct sale; the RBI does not give a weekly breakdown.
The pressure on the rupee comes from several directions. Crude oil prices have surged in October, and India imports most of the oil it uses, so a higher oil bill means more demand for dollars. Market reports on October 22 also pointed to falling Indian share prices and dollar buying by importers. Inflows linked to the Jio Platforms share sale had helped the rupee rise for eight sessions before that, but rising crude ended the streak.
The two weekly falls together come to about $13.6 billion. Even so, a stock of about $721 billion still leaves the RBI room to keep acting if the currency comes under fresh pressure.
| | Week ended | Total reserves | Weekly change | |
|---|---|---|
| | September 4, 2026 | $785.706 billion (record) | not applicable | |
| | October 9, 2026 | $726.027 billion | down $8.578 billion | |
| | October 16, 2026 | about $721 billion | down about $5 billion | |
Impact
Short-term: The figures show the RBI is still spending reserves to keep the rupee steady near 94 to 95 per dollar. Traders will watch crude prices and foreign investment flows; if oil stays high, the central bank may need to keep selling dollars, and reserves could fall again in the coming weeks.
Long-term: A steady fall in reserves can limit how long a central bank can lean against market pressure. India's reserves remain large, but the trend matters for credit rating agencies and foreign investors, who watch reserves as a sign of how well a country can handle shocks.
Who is affected: Importers, especially of oil, electronics and gold, pay more when the rupee is weak. Families paying foreign university fees or travelling abroad face higher costs in rupees. Exporters and families receiving money from relatives abroad gain from a weaker rupee. Companies with foreign-currency loans watch the exchange rate closely, because a weaker rupee makes repayments costlier.
Key Takeaway
India's reserves fell about $5 billion to about $721 billion in the week to October 16, as the RBI kept using its dollar holdings to steady a rupee under pressure from high oil prices.
Questions and Answers
How much are India's forex reserves now?
According to RBI data released on October 23, 2026, India's foreign exchange reserves were about $721 billion in the week ended October 16, about $5 billion lower than the week before.
Why are India's forex reserves falling?
The main reason is the Reserve Bank of India selling dollars to steady the rupee, which has been under pressure from high crude oil prices, share-market falls and importers' demand for dollars. Changes in the value of other currencies the RBI holds also affect the total.
Did any part of the reserves rise this week?
Yes. The value of India's gold reserves rose by $706 million to $105.8 billion, and special drawing rights edged up to $18.578 billion. Foreign currency assets fell by $5.758 billion.
How far are reserves from their peak?
The reserves reached a record $785.706 billion on September 4, 2026. At about $721 billion they are now roughly $65 billion lower.
Disclaimer: Prepared by the Peepals newsroom from publicly available sources with AI assistance. Information is accurate to the best of our knowledge at the time of publication and may change. Images may be representative. Not professional advice. Report an error via our contact page.
By Neha Kapoor, Economy CorrespondentCovers Economy and more for Peepals Business. All stories by Neha Kapoor
Punjab stubble fires hit 510 as Centre pushes paddy straw sales
Firstwork raises $15 million for AI agents that onboard frontline workers
Neha Kapoor is a pen name of the Peepals Global Editorial Team, which researches, fact-checks and publishes every story. The portrait is an illustration.
