India’s foreign exchange reserves ended their three-week upward trend, falling by $2 billion to $646.67 billion as of May 24, according to central bank data released on Friday. This drop follows a $10.8 billion increase over the preceding three weeks. During the referenced week, the rupee fluctuated between 83.0250 and 83.3600 against the dollar, achieving its best weekly performance in over five months. The Reserve Bank of India (RBI) engages in the foreign exchange market to mitigate excessive volatility in the rupee.

In its annual report released on Thursday, the Reserve Bank of India (RBI) announced plans to “enhance the intervention toolkit” to manage excessive rupee volatility against the dollar in fiscal 2025, though it did not detail the specific tools to be used.

Variations in foreign currency assets result from the RBI’s market interventions and the appreciation or depreciation of the foreign assets in the reserves. Additionally, foreign exchange reserves encompass India’s reserve tranche position in the International Monetary Fund.

During the reported week, the rupee fluctuated between 83.0250 and 83.3600 against the dollar, marking its best performance in over five months. However, by Friday, the rupee had settled at 83.4625, ending its worst week in more than two months.