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Informist, Wednesday, Aug. 6, 2025

--RBI Malhotra: FX reserves cover 11 mos of merchandise imports 

--RBI Malhotra: India's FX reserves at $688.9 bln 

--RBI Malhotra: India's FX reserves stood at $688.9 bln as on Aug 1 

MUMBAI – India's foreign exchange reserves fell by $9.29 bln to a 10-week low of $688.9 billion in the week ended Aug. 1, Reserve Bank of India Governor Sanjay Malhotra said while announcing the outcome of the three-day Monetary Policy Committee meeting Wednesday. Malhotra said the reserves are sufficient to cover more than 11 months of merchandise imports. "Overall, India's external sector remains resilient. We remain confident of meeting our external financing requirements comfortably", Malhotra said. 

He also added that gross foreign direct investment to India remained strong during April and May in 2025-26 (Apr-Mar). However, net foreign direct investment moderated during the same period owing to higher outflows. Net FDI inflows shrank by 2.2% to $3.9 billion in April-May from $4.0 billion a year ago. Foreign portfolio investment inflows, too, remained strong. However, net FPI to India recorded outflows of $0.8 billion so far in the financial year, he said. During the period from April to July, net inflows stood at $2.6 billion in the equity market while the debt market witnessed a net outflow of $3.5 billion. 

External commercial borrowings witnessed higher net inflows in comparison to the previous year, Malhotra said. Net inflows under external commercial borrowings rose to $3.5 billion in the June quarter of FY26, lower $1.6 billion a year ago. Inflows under non-resident deposits also remained positive despite witnessing some moderation as net inflow of NRI deposits fell to $1.9 billion in April-May of FY26 from $2.8 billion for the corresponding period a year ago. 

On the external sector, India's current account deficit moderated to 0.6% of the GDP in FY25 from 0.7% of GDP in FY25, driven by robust services exports and strong remittance receipts despite a higher merchandise trade deficit. Merchandise trade deficit further widened in the June quarter. As per provisional estimates, India's services exports expanded by 10.1% in the quarter ended June while services imports rose by 1.5% for the same period. Net services exports grew by 20.7% for the same period. 

"Robust services exports coupled with strong remittance receipts are expected to keep CAD (current account deficit) within the sustainable level during the current financial year," Malhotra said.

End

US$1 = INR 87.7500

Reported by Gowri Lakshmi

Edited by Deepshikha Bhardwaj

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