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Gold Reserves Slump Drives India Forex Reserves Down $10B
Gold holdings fell sharply while foreign currency assets rose, RBI data show. The drop is a valuation effect, not a sign of intervention. The next release on June 19 covers NDF expiry week.
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India's foreign exchange reserves fell $9.99 billion to $671.63 billion in the week ended June 12, according to the Reserve Bank of India's weekly statistical supplement. The decline was concentrated in gold holdings, which dropped by an amount that more than offset a modest increase in foreign currency assets.
The composition matters more than the headline for anyone tracking the rupee. Foreign currency assets – the component the RBI actually uses for spot and forward intervention – rose by roughly $1.2 billion, the data show. Gold reserves are revalued at the LBMA AM fix each week. With the metal sliding about 3% in the June 8-12 window as the dollar strengthened and U.S. real yields rose, the rupee-denominated value of the RBI's bullion holdings fell mechanically. That accounts for most of the headline decline.
The implication: the RBI's intervention firepower did not shrink. The drop in total reserves is a valuation adjustment, not a signal that the central bank stepped in aggressively to sell dollars. That is the more important read for traders looking at USDINR positioning.