Synopsis: The Reserve Bank of India (RBI) released Balance of Payments (BoP) data for Q3 (October–December) 2025-26. Foreign exchange reserves increased by US$ 19.4 billion in nominal terms during April–December 2025, mainly due to a strong US$ 50.2 billion valuation gain, despite a BoP-based depletion of US$ 30.8 billion.
What Is Balance of Payments (BoP)?
The Balance of Payments (BoP) is a financial statement that records all economic transactions between India and the rest of the world during a specific period.
It consists of three major components:
- Current Account: Includes exports, imports, services, remittances, and income flows.
- Capital Account: Includes foreign investments, loans, external borrowings, and banking capital.
- Valuation Changes: Reflect changes in reserve value due to currency movement, gold prices, and bond yields.
If inflows exceed outflows, reserves increase. If outflows are higher, reserves decline.
RBI Releases BoP Data for Q3 2025-26
The Reserve Bank of India (RBI) has released the Balance of Payments (BoP) data for the third quarter (October–December) of 2025-26.
The data explains the variation in foreign exchange reserves during April–December 2025 through current account balance, capital flows, and valuation effects.
Sources of Variation in Forex Reserves (US$ Billion)
| Item | Apr–Dec 2024 | Apr–Dec 2025 |
|---|---|---|
| Current Account Balance | -36.7 | -30.2 |
| Capital Account (Net) | 22.9 | -0.6 |
| Foreign Investment | 10.0 | -1.3 |
| FDI | 0.6 | 3.0 |
| Portfolio Investment | 9.4 | -4.3 |
| Banking Capital | -0.8 | 1.0 |
| Short-term Credit | 11.6 | 15.3 |
| External Assistance | 4.2 | 1.0 |
| External Commercial Borrowings | 7.9 | 6.7 |
| Other Capital Account Items | -10.0 | -23.4 |
| Valuation Change | 3.1 | 50.2 |
| Total Change in Reserves | -10.7 | 19.4 |
Forex Reserves: Nominal vs BoP Basis
On a Balance of Payments (BoP) basis (excluding valuation effects):
- Forex reserves declined by US$ 30.8 billion during April–December 2025.
- In April–December 2024, reserves declined by US$ 13.8 billion.
In nominal terms (including valuation effects):
- Forex reserves increased by US$ 19.4 billion during April–December 2025.
- In April–December 2024, reserves declined by US$ 10.7 billion.
Comparative Position of Reserve Changes (US$ Billion)
| Item | Apr–Dec 2024 | Apr–Dec 2025 |
|---|---|---|
| Change in Forex Reserves (Including Valuation Effects) | -10.7 | 19.4 |
| Valuation Effects (Gain/Loss) | 3.1 | 50.2 |
| Change in Forex Reserves (BoP Basis) | -13.8 | -30.8 |
Why Did Valuation Gains Rise?
The valuation gain increased sharply to US$ 50.2 billion due to:
- Rise in global gold prices
- Depreciation of US dollar against major currencies
- Lower global bond yields
Key Takeaways from RBI Data
- Current account deficit narrowed.
- Capital account inflows weakened.
- Portfolio investment turned negative.
- Valuation gains boosted overall reserves.
📌 Key Takeaway
India’s forex reserves rose by US$ 19.4 billion in nominal terms during April–December 2025, primarily due to strong valuation gains. However, on a pure BoP basis, reserves declined by US$ 30.8 billion, reflecting underlying external sector pressures.