India’s foreign exchange reserves decreased for the second consecutive week, dropping by $1.877 billion to $686.227 billion in the week ending November 28, as per the Reserve Bank of India (RBI). This decline followed a more significant drop of $4.472 billion in the previous week, with reserves at $688.104 billion during that period.
The recent reduction was primarily attributed to a decrease in foreign currency assets, which constitute the largest part of India’s reserves. Foreign currency assets fell by $3.569 billion, reaching $557.031 billion, according to the data.
RBI Governor Sanjay Malhotra announced a 25-basis-point reduction in the repo rate to 5.25% on Friday. He highlighted that India’s current account deficit (CAD) improved from 2.2% of GDP in Q2 2024-25 to 1.3% in Q2 2025-26, driven by strong services exports and robust remittance inflows.
Despite challenges in the merchandise sector, with exports shrinking in October 2025 and imports rising for the second consecutive month, leading to a wider trade deficit, the RBI remains optimistic. They anticipate that healthy services exports and remittances will help maintain a moderate CAD for the remainder of the year.
On the external financing front, gross foreign direct investment demonstrated robust growth in the first half of the year. Net FDI also experienced a significant increase, supported by reduced repatriation levels despite a rise in outward FDI. In contrast, foreign portfolio investors turned into net sellers, pulling out $0.7 billion between April and December 3, 2025, mainly due to equity market outflows. Moreover, external commercial borrowings and inflows from non-resident deposits moderated compared to the previous year.