India's forex reserves drop $7.79 billion to $690.69 billion

Mumbai, May 8. According to the latest data from the Reserve Bank of India (RBI), India's foreign exchange reserves fell by $7.794 billion to $690.693 billion in the week ended May 1, 2026.

One of the biggest weekly drops in recent months

This is among the largest weekly drops in the past six months. Foreign currency assets fell by $7.2 billion, gold reserves declined by $0.5 billion, and the IMF reserve position saw a marginal dip.

Pressure on the rupee

The main reasons are mounting pressure on the rupee and outflows by foreign portfolio investors (FPIs) from Indian equity and bond markets. Early May saw the rupee weaken to ₹84.50 against the dollar. The RBI sold dollars to defend the currency, drawing down reserves.

RBI Governor's assurance

After the latest monetary policy review, the RBI Governor said "foreign capital outflows are temporary and will slow as asset valuations correct". Deputy Governor Poonam Gupta added that "the market is not correctly pricing in India's long-term investment story".

Why the outflows

Analysts cite three reasons: (1) signals from the US Federal Reserve about keeping interest rates higher for longer, (2) renewed interest in China-focused investments, and (3) temporary risk-perception around the India-Pakistan tension anniversary. Together these are making FPIs cautious.

The road ahead

Experts believe reserves will hold in the $685-695 billion band over coming weeks. The RBI still has comfortable buffers — current reserves cover 11 months of imports, well above the IMF-recommended minimum.