As of November 22, 2024, India's foreign exchange reserves have fallen for the eighth consecutive week, now standing at $656.58 billion. This marks a decrease of $1.31 billion from the previous week and reflects a total drop of $48 billion over the past two months [5c839970]. The decline is primarily attributed to foreign capital outflows, which saw foreign portfolio investors withdrawing ₹96,358 crore (approximately $11.5 billion) in October and an additional ₹21,444 crore in November 2024. These outflows have put significant pressure on the Indian rupee, contributing to its depreciation and increasing import costs, which in turn exacerbates inflationary pressures [5c839970].
In contrast, India's gold reserves have seen a notable increase, reaching $69.8 billion, as the country shifts its asset allocation strategy amid global economic uncertainties. This rise in gold holdings is viewed as a hedge against potential economic sanctions and geopolitical tensions [d04ac4de]. The Reserve Bank of India (RBI) has been actively selling dollars to stabilize the rupee, a move that further depletes the country's forex reserves [5c839970].
The RBI's efforts to manage the currency's volatility come in the wake of the rupee's depreciation, which has raised concerns about the overall economic stability of India. The central bank's interventions are crucial as the forex reserves peaked at $704.89 billion in September 2024, highlighting the significant decline since then [5c839970].
Looking ahead, analysts suggest several potential scenarios, including continued declines in reserves, ongoing stabilization efforts by the RBI, or the possibility of structural reforms to address the underlying economic challenges [5c839970]. Meanwhile, other countries in the region, such as Malaysia, have reported growth in their foreign reserves, contrasting with India's current situation [2e5a7052][6ae02b59].
In a related context, the Philippines has also experienced a decline in its gross international reserves (GIR), which dropped to $108.5 billion as of the end of November 2024, down from $111.1 billion in October. This decline is attributed to higher foreign debt and lower gold prices, with the government's external debt reaching P5.13 trillion, marking a 3.5% increase from September [fec3ccf7]. The Philippine peso is currently trading at P59 per US dollar, but is expected to strengthen due to anticipated holiday remittance inflows [fec3ccf7]. These developments in both India and the Philippines highlight the broader economic challenges faced by countries in the region amidst fluctuating global market conditions.