NEW DELHI– The Indian rupee remained stable in real effective terms in November, as depreciation in nominal terms was offset by relatively higher domestic prices compared with major trading partners, according to the Reserve Bank of India’s December Bulletin.
The central bank said the rupee weakened against the U.S. dollar during November amid a stronger dollar, subdued foreign portfolio investment flows, and uncertainty surrounding the India-U.S. trade agreement.
“The volatility of the INR, as measured by the coefficient of variation, moderated in November from a month ago and remained relatively lower than most currencies,” the RBI said. It added that the rupee has depreciated by 0.8 per cent so far in December, up to December 19, compared with its end-November level.
During the 2025-26 financial year so far, up to December 18, foreign portfolio investors recorded net outflows, largely driven by selling in the equity segment. Portfolio flows turned negative in December after registering inflows in the previous two months.
The RBI said uncertainty over the India-U.S. trade deal and investor caution amid elevated domestic equity valuations have kept foreign portfolio inflows muted in recent months.
External commercial borrowing activity also moderated during April to October 2025, reflecting slower offshore fundraising. Net inflows from such borrowings were lower compared with the same period last year, although a significant portion of the funds raised was directed toward capital expenditure.
India’s current account deficit narrowed in the second quarter of 2025-26 compared with a year earlier, supported by a lower merchandise trade deficit, strong services exports, and robust remittance inflows.
However, net capital inflows were insufficient to fully finance the current account deficit, resulting in a drawdown of foreign exchange reserves during the period.
Despite this, the RBI said India’s foreign exchange reserves remain adequate, providing cover for more than 11 months of goods imports and over 92 per cent of the country’s outstanding external debt. (Source: IANS)
