India’s foreign exchange reserves declined by US$22.5 billion during April-June 2026, reversing a US$29.8 billion increase recorded in the same period of 2025, according to data released by the Reserve Bank of India (RBI) on September 1, 2026.
The RBI’s latest balance of payments data showed that the decline included a US$14.4 billion valuation loss. Excluding valuation effects, reserves fell by US$8.1 billion on a balance of payments basis, compared with an increase of US$4.5 billion in April-June 2025.
Portfolio outflows and capital account deficit
The current account recorded a deficit of US$4.2 billion during April-June 2026, compared with US$3.4 billion a year earlier. The net capital account also moved into a deficit of US$3.9 billion, against a surplus of US$7.9 billion in the corresponding period of 2025.
Foreign investment recorded a net outflow of US$3.5 billion. Within this, foreign direct investment (FDI) remained positive at US$6.1 billion, while portfolio investment recorded an outflow of US$9.6 billion. Banking capital contributed US$2.8 billion, including US$2.8 billion through NRI deposits.
Short-term credit contributed US$3.5 billion, while external assistance added US$0.4 billion. External commercial borrowings contributed US$1.0 billion, while other items in the capital account recorded a negative US$8.1 billion.
The RBI also reported a valuation loss of US$14.4 billion during April-June 2026, compared with a valuation gain of US$25.3 billion in April-June 2025. The central bank said the loss primarily reflected a lower price of gold and appreciation of the US dollar against major currencies.
Overall, the combination of the US$8.1 billion decline on a balance of payments basis and the US$14.4 billion valuation loss resulted in a US$22.5 billion reduction in foreign exchange reserves during the quarter.
Source: Reserve Bank of India: Sources of Variation in Foreign Exchange Reserves during April-June 2026
Related: RBI Forex Reserves Rise $12.42 Billion to $729.33 Billion
