India's forex reserves rise $22.8 bn in FY26 on valuation gain
Valuation changes masked a $23.6 bn balance of payments deficit as gold prices and dollar weakness boosted reserves.
What changed
- Net reserves on BoP basis fell $23.6 bn vs $5 bn fall in FY25
- Valuation gain jumped to $46.4 bn from $26.9 bn
- Portfolio investment recorded $16.4 bn outflow
The read
India's foreign exchange reserves posted a nominal increase of $22.8 billion in FY26, but this was entirely due to valuation gains of $46.4 billion from gold price rises and a weaker US dollar. On a balance of payments basis, reserves actually depleted by $23.6 billion, more than quadrupling the $5 billion fall in FY25. The deterioration came from a wider current account deficit of $25.4 billion and a sharp reversal in portfolio investment, which swung from an inflow of $3.6 billion to an outflow of $16.4 billion. Banking capital and short-term credit provided some offset, but the capital account surplus shrank to just $1.8 billion from $18 billion. The numbers suggest underlying external stress that valuation masks cannot hide.
Key numbers
- Change in Foreign Exchange Reserves: $22.8 bn
- Valuation Effects: $46.4 bn
- Change on BoP basis: -$23.6 bn
- Current Account Balance: -$25.4 bn
Primary source: rbi.org.in