India forex reserves drop to one-year low of $681.4 billion
India's forex reserves fell to $681.4 billion as the central bank defended the rupee. The decline was driven by lower gold values and currency interventions.
India saw its foreign exchange reserves drop $7.5B to a one-year low of $681.4B during the week ended May 22. The decline follows aggressive central bank intervention to support the rupee against capital outflows. For investors, the shrinking buffer signals the rising cost of maintaining currency stability as geopolitical tensions pressure emerging market assets.
### Gold Valuation and Currency Defense Drive Decline A $4.5B drop in the value of gold holdings drove the majority of the weekly decline. Foreign currency assets also fell nearly $3B to $543B, reflecting both market valuation changes and active dollar sales. The Reserve Bank of India (RBI) has sold dollars to protect the rupee, which has weakened 4% since a conflict began between the United States and Iran.
