India's Forex Reserves Drop by $2.11 Billion to $723.608 Billion

608 billion for the week ended February 20, 2026, according to the latest data released by the Reserve Bank of India (RBI). Despite this marginal decline, the reserves continue to remain near historic highs, providing a strong cushion to the national economy against global financial volatilities, while the decrease follows a period of significant accumulation where the reserves had touched unprecedented levels, reflecting the country's strong external sector performance.

Historical Context and Previous Records

727 billion during the week ended February 13, 2026.66 billion. 774 billion mark. The current fluctuation is being viewed by market observers as a routine adjustment following a period of rapid growth. Over the past year, India has consistently built up its forex chest, moving from the $600 billion range to consistently staying above the $700 billion threshold, showcasing a resilient economic trajectory.

Impact of Foreign Currency Assets (FCA)

The primary driver behind the weekly change was the fluctuation in Foreign Currency Assets (FCA), which constitute the largest component of the total reserves. According to the RBI's weekly statistical supplement, the FCA decreased Importantly during the reporting period. FCAs are expressed in US dollar terms but include the effect of appreciation or depreciation of non-US units like the Euro, Pound, and Yen held in the foreign exchange reserves. When the US dollar strengthens against these major global currencies, the value of the reserves expressed in dollars tends to decrease. Officials attribute a major portion of the current decline to these valuation effects and currency movements in the international market.

Status of Gold Reserves and SDRs

Apart from foreign currencies, India's reserves include Gold, Special Drawing Rights (SDRs), and the reserve position with the International Monetary Fund (IMF). Gold reserves have also seen valuation changes in line with international bullion prices. The RBI has been strategically increasing its gold holdings over the last few years as part of its reserve diversification strategy. The Special Drawing Rights and the reserve position with the IMF remain stable components that provide liquidity support during balance of payment requirements. The combined strength of these assets ensures that India maintains a diversified and liquid portfolio to meet its international obligations.

RBI Market Operations and Currency Stability

The Reserve Bank of India frequently intervenes in the foreign exchange market to manage volatility in the Indian Rupee. According to market reports, the central bank sells dollars from the reserves to prevent a sharp depreciation of the rupee during times of capital outflows or global dollar strength. Conversely, it buys dollars when there are heavy inflows to prevent excessive appreciation of the local currency. The week ended February 20 saw various market dynamics, including Foreign Portfolio Investor (FPI) movements and global trade settlements, which necessitated active liquidity management by the central bank. The RBI's intervention is aimed at maintaining orderly market conditions rather than targeting a specific level for the currency.

Economic Buffer and Global Standing

608 billion, India maintains one of the largest foreign exchange chests globally, trailing only a few nations like China and Japan. This level of reserves is considered highly adequate, covering more than 12 months of projected imports. A strong forex position enhances India's sovereign credit profile and provides confidence to international investors regarding the country's ability to service its external debt and manage trade deficits. Authorities emphasize that the current dip is a technical movement and doesn't signal any underlying weakness in the external accounts, as the country continues to attract steady Foreign Direct Investment (FDI) and maintains a healthy export pipeline.