India's foreign exchange reserves fell $18.34 billion to $747.56 billion in the week ended September 25. It was the third straight weekly decline, taking the total drop to $38.15 billion in three weeks from the record $785.71 billion on September 4. Here is why.

The RBI is selling dollars and buying rupees to stop the currency from falling too fast. With war in the Middle East pushing up crude prices, India's import bill is rising. A weaker rupee would make imported fuel even costlier, feeding inflation that already shows in LPG prices up 5.28 percent in August.

Foreign investors are also pulling money out of Indian stocks, adding to the pressure. On October 2, G7 countries agreed to release 100 million barrels of crude from emergency reserves to cool prices, which should ease some strain.

India's own physical oil buffer is small: about 21 million barrels against China's nearly 1.5 billion, per EIA estimates. So the RBI must work harder with financial reserves. Even after the fall, $747.56 billion remains a formidable defence fund.

Sources: firstscroll.in; thehindubusinessline.com.