India Has Sufficient Forex Reserves, Not Concerning, Says RBI Governor

India has sufficient foreign exchange reserves and there is no reason for worry, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on April 8, 2026, assuaging concerns over large capital market outflows denting reserves amid the US-Iran war.

Market participants have been concerned about eroding dollar holdings of the RBI amid the war. According to latest data from RBI, India’s forex reserves rose to $687.10 billion during the week ended April 3, 2026 from $688.06 billion a week earlier. Incidentally, though forex reserves have risen, it has come against the backdrop of falling reserves in the preceding weeks.

India’s forex reserves have fallen from a record high of $728.49 billion in late February. This was primarily due to RBI’s persistent interventions in the foreign exchange market by selling dollars to shield the rupee from pressures owing to the conflict in West Asia.

A sharp surge in crude oil prices coupled with lower gold prices also led to the fall in value of the reserves. Malhotra said that India’s forex reserves are sufficient for at least the next 11 months, which is a “standard metric”.

Maholtra added that India’s trade agreements with major economies, such as the UK should help in improving the current and capital accounts of the country, which in turn, would reduce the deficit in its balance of payments (BoP). In the December quarter of 2025, the current account deficit (CAD) widened to $13.20 billion, or 1.30 per cent of the gross domestic product (GDP), due to higher goods trade deficit amid uncertainty on US tariffs. Compared to this, the CAD was $11.30 billion, or 1.10 per cent of GDP in the previous year. India recorded a deficit of $24.4 billion in its BoP during the quarter ended December, 2025, lower than $37.70 billion a year ago.

“The capital accounts are robust and the current account is quite manageable. So, there is no need to be concerned about the BoP position. A lot of (trade) agreements with major economies that have come in place...All of this should help,” Malhotra said after reading out the monetary policy statement, where the RBI’s monetary policy committee (MPC) had decided to keep the repo rate at 5.25 per cent. 

Malhotra added that foreign portfolio investment (FPI) flows are expected to improve this year, particularly with investments in the technology and financial services sector. So far, in the current financial year 2026-27, which began on April 1, FPIs have Rs 57,239 crore worth of assets, and a record Rs 1.53 lakh crore in the previous financial year, according to data from the National Securities Depository (NSDL).

Malhotra added that macroeconomic fundamentals of the economy remain strong despite risks to growth and inflation due to the ongoing tensions in West Asia. “Those who want to make long-term money will certainly come to India, and those who are in for quick money, will come and go,” he said.