RBI MPC 2025: Rupee firms as forex reserves rise to $686 billion

While RBI Governor Sanjay Malhotra announced on Friday that the central bank reduced the repo rate by 25 basis points to 5.25%, he said that India’s foreign exchange reserves increased to $686 billion as of November 28, providing 11 months of import protection.

The announcement comes amid a recovery in the rupee, which gained 20 paise to 89.69 against the US dollar in early trade ahead of the policy decision. The currency opened at 89.85 and strengthened in the morning session, gaining 26 paise from Thursday’s record lows and closing its recovery at 89.89.

Gains in the rupee were supported by weakening crude oil prices (Brent trading at $63.12 per barrel) and improving domestic confidence. Stock markets opened higher despite foreign institutional investors selling Rs 1.944 billion worth of stocks on Thursday; Sensex rose 53 points and Nifty rose 28 points.
On the global front, the dollar index rose to 90.03, while risk appetite strengthened after Fitch raised India’s FY26 growth forecast to 7.4%, citing support from rising consumption and GST reforms. The RBI also raised its full-year GDP projection to 7.3%, with higher estimates for the third and fourth quarters.

The 25 basis point rate cut, the first since the August and October pauses, was in line with expectations that falling inflation created additional room for monetary expansion. MPC said its priority remains supporting growth while maintaining rupee stability amid volatile global conditions.