Forex Reserves Up USD 19.4 Billion in Nominal Terms
The country’s foreign exchange reserves, including valuation effects, increased by USD 19.4 billion during the nine-month period. This marks a sharp contrast to the depletion of USD 10.7 billion recorded during April–December 2024.
The RBI released its report titled Sources of Variation in Foreign Exchange Reserves in India during April–December 2025, detailing the factors behind the movement in reserves.
Reserves Fall on Balance of Payments Basis
However, when valuation effects are excluded, the picture changes. On a balance of payments (BoP) basis, foreign exchange reserves declined by USD 30.8 billion during April–December 2025. This compares with a depletion of USD 13.8 billion during the same period in the previous year.
This indicates that while headline reserves rose due to favourable valuation changes, underlying external flows remained under pressure.
Strong Valuation Gains Support Reserves
The RBI data showed that valuation gains rose sharply to USD 50.2 billion during April–December 2025, compared to just USD 3.1 billion in the corresponding period last year.
These gains were primarily driven by:
- Higher gold prices
- Depreciation of the US dollar against major global currencies
- Lower global bond yields
The increase in gold prices particularly contributed to the strengthening of India’s reserve position.
Current Account Deficit Narrows
India’s current account deficit (CAD) narrowed during the period under review. The deficit stood at USD 30.2 billion during April–December 2025, compared with USD 36.7 billion in the same period of 2024.
A lower current account deficit indicates relatively improved trade and income flows compared to the previous year.
Capital Account Swings to Deficit
Meanwhile, the capital account recorded a deficit of USD 0.6 billion during April–December 2025. This is a significant reversal from a surplus of USD 22.9 billion in the corresponding period last year.
Inputs from PTI