RBI data shows forex reserves rose $22.8 bn in 2025-26, driven by valuation gains
Nominal reserves increased but underlying BoP deficit widened to $23.6 bn.
What changed
- Foreign exchange reserves (incl. valuation) increased by US$ 22.8 billion in 2025-26
- On BoP basis, reserves depleted by US$ 23.6 billion, more than four times the prior year's $5.0 billion fall
- Valuation gains surged to US$ 46.4 billion, more than double the prior year's US$ 26.9 billion
The read
India’s foreign exchange reserves posted a nominal gain of US$ 22.8 billion in 2025-26, but the headline number masks a sharp deterioration in the underlying balance of payments. Excluding valuation effects, reserves fell by US$ 23.6 billion — nearly five times the US$ 5.0 billion decline in 2024-25. The US$ 46.4 billion valuation gain, driven by higher gold prices and dollar weakness, more than offset the BoP deficit. The capital account surplus shrank to just US$ 1.8 billion from US$ 18.0 billion, as portfolio outflows of US$ 16.4 billion and a swing in ‘other items’ to -US$ 22.7 billion overwhelmed stable NRI deposits and ECB inflows. The verdict: India’s reserves cushion is increasingly a reflection of favourable global prices, not from underlying capital inflows.
Key numbers
- Change in reserves (incl. valuation): US$ 22.8 bn
- Valuation effects: US$ 46.4 bn
- Change on BoP basis: -US$ 23.6 bn
- Current account deficit: US$ 25.4 bn
Primary source: rbi.org.in