Forex Reserves Fall by USD 7.79 Billion to USD 690.69 Billion
India’s foreign exchange reserves declined sharply during the week ended May 1. The Reserve Bank of India said the country’s reserves fell by USD 7.794 billion to USD 690.693 billion. The previous reporting week had also recorded a decline. During the week ended April 24, reserves had dropped by USD 4.82 billion to USD 698.487 billion.
The Forex reserves trend has remained under pressure in recent weeks. The reserves had earlier touched a record high of USD 728.494 billion during the week ended February 27.
However, tensions in the Middle East increased pressure on the rupee. The RBI intervened in the currency market and sold dollars to manage volatility. These interventions reduced reserve levels over several weeks.
A decline in reserves does not automatically indicate economic weakness. However, prolonged pressure on reserves usually signals changing global conditions and tighter currency management. Economists closely track these movements because they can gradually influence inflation, liquidity and borrowing costs across sectors.
Foreign currency assets see major drop
The Forex reserves data showed a decline in foreign currency assets, which form the largest part of the reserves. These assets include the impact of movements in global currencies such as the euro, pound and yen. Currency fluctuations in international markets also influence the overall reserve value.
Gold reserves also declined significantly during the week. The RBI said the value of gold reserves fell by USD 5.021 billion to USD 115.216 billion.
IMF position and SDR holdings improve slightly
The Forex reserves report also showed small gains in Special Drawing Rights holdings. SDRs increased by USD 15 million to USD 18.789 billion.
India’s reserve position with the International Monetary Fund also improved marginally. The position rose by USD 8 million to USD 4.863 billion during the reporting week.
RBI continues currency management efforts
The Forex reserves movement reflects ongoing efforts by the RBI to stabilise the rupee amid global uncertainty. The central bank continues to monitor currency markets closely as geopolitical tensions affect global financial flows.
Despite the recent decline, India’s reserves remain at comfortable levels. Economists believe the reserves continue to provide a strong buffer against external shocks and currency volatility.
At the same time, a weaker currency can gradually increase import costs, especially for commodities and industrial inputs. Over time, this may contribute to inflationary pressure in the economy. If inflation concerns persist, borrowing costs may also remain elevated for longer periods.
Real estate faces gradual impact
The decline in reserves could gradually influence India’s real estate sector. A weaker currency may raise construction costs linked to imported materials, metals and fittings connected to global prices. Developers may initially absorb some of these pressures, but sustained increases usually affect pricing and project margins over time.
Higher borrowing costs could also affect housing demand, especially in the mid-income segment. Home loan rates continue to remain in the range of around 8.5 to 9.25 percent. Even small increases in borrowing costs often influence buyer sentiment and decision-making.
The property market has already started showing signs of moderation after a strong post-pandemic growth phase. Prices across major cities have continued to rise, but the pace has become more measured compared to previous years.
Markets such as NCR and the Mumbai Metropolitan Region witnessed strong appreciation in recent years, especially in infrastructure-linked corridors. Areas such as Dwarka Expressway, New Gurugram and peripheral parts of MMR recorded significant gains due to improved connectivity and rising investor interest.
However, housing sales across major cities have slowed in recent quarters. Industry estimates suggest sales across the top eight cities eased by around 10 to 13 percent year-on-year during the first quarter of 2026. The slowdown does not indicate a reversal, but it signals that the market is moving away from the aggressive momentum seen earlier.
Developers are also changing strategy in response to evolving market conditions. Many firms are phasing launches carefully, monitoring inventory more closely and focusing strongly on project execution timelines. The sector is now placing greater importance on disciplined expansion rather than rapid supply addition.
Buyer behaviour is also shifting gradually. End-users are playing a larger role in the market while speculative investor-driven demand has moderated in some segments. Buyers increasingly prefer ready or near-completion projects as certainty and financial discipline gain importance in a changing economic environment.
Institutional investment trends also remain linked to broader macroeconomic conditions. Domestic capital participation in Indian real estate has strengthened over time, but foreign investment continues to play an important role in commercial assets and large residential platforms. Currency stability often influences investor confidence and investment flows.
Economists believe the present reserve decline reflects active currency management rather than structural stress. However, if global uncertainty remains elevated and pressure on the rupee continues, sectors such as real estate could gradually feel the broader impact through financing costs, pricing trends and investment sentiment.
The market is not entering a downturn, but it is clearly transitioning into a more balanced and measured phase. Buyers, developers and investors are becoming more selective as economic conditions evolve.
