India's foreign exchange reserves have reached a new all-time high of $785.706 billion as of September 4, 2026, marking a record weekly addition of $44.903 billion according to the RBI. As reported by The Economic Times, this surge has pushed India past Russia to become the world's fourth-largest holder of foreign exchange reserves, behind China, Japan and Switzerland. The Reserve Bank of India announced this milestone on Friday, September 11, 2026. This surge builds upon the previous record high of $740.803 billion achieved in the week ended August 28, 2026, demonstrating the continued effectiveness of the RBI's concessional forex swap initiatives. The foreign currency assets component alone increased by $47.498 billion to $648.168 billion during the week ended September 4, as reported by the central bank. The reserves had been declining since the start of the West Asia conflict earlier this year, but the RBI's June 2026 forex swap facility has successfully reversed this trend. The latest increase follows a $11.475 billion rise in the previous reporting week, with the current weekly gain representing the biggest on record and taking the reserves more than $44 billion above the previous week's level. As per The Economic Times, the forex kitty has been on an upward journey for the 10th consecutive week, with a cumulative $119 billion haul, strengthening the central bank's muscle for forex market intervention.
The rupee depreciated to ₹95.56 per dollar on Friday, falling for a fourth straight session as higher crude oil prices and US Treasury yields weighed on the currency. As reported by Business Standard, the rupee had weakened 4.79% since the onset of the West Asia conflict and 0.4% this month. However, the currency pared losses after RBI intervention, with dealers noting that "the RBI conducted swap along with spot intervention which helped the rupee." The rupee had previously depreciated to a new all-time low of near ₹97 per dollar in May 2026 and remained under pressure thereafter, despite forex reserves mobilised under the FCNR(B) window providing comfort. The recent rally in money market yields reflects resilience amid elevated crude oil prices, a hawkish Fed and global long-end bond yields at multi-year highs.
The latest data shows gold reserves decreased by $2.594 billion to $34.944 billion during the week, while gold prices fell 0.56% to $4,429 an ounce. India's reserve position with the IMF increased by $2 million to $4.916 billion at the end of the reporting week. The USDINR has remained stable in a range of ₹94.33-96.57 despite global volatility, demonstrating the effectiveness of these measures. The massive foreign exchange inflows have flooded the banking system with durable surplus liquidity, pushing the weighted average call rate well below the RBI repo rate, though this provides relative comfort amid challenging external conditions. As reported by The Economic Times, if we exclude gold, we almost had a $48 billion addition to the reserves, with market participants expecting foreign currency assets to rise further as additional foreign currency inflows are likely to continue until the second week of September, potentially taking FCAs above $655 billion.
The cost of hedging — the difference between market forward premium and concessional swap rate — will be borne by the RBI. According to Business Standard, in 2013, analysts assessed the implied cost of the concessional swap window at ₹15,000-20,000 crore over the life of the swap. With overall forex inflows under the current facility already at $136.377 billion — nearly five times larger than the 2013 scheme, the resulting cost will be sharply higher, which will impact the RBI's profits and subsequent surplus transfer to the government over the life of the swaps. The RBI is also taking steps to manage this excess liquidity, including an overnight variable rate reverse repo (VRRR) auction on September 3 that mopped up ₹5.19 lakh crores. The RBI's special swap measures had mobilised a higher-than-expected $136.377 billion in foreign currency inflows by August 31, with the window for FCNR(B) deposits closed on August 31, while external commercial borrowings and overseas foreign currency bonds remain eligible until December 31.
Reserves have risen by $120 billion so far in the current financial year, with foreign currency assets staging a sharp turnaround after almost two years of decline and stagnation. As reported by Business Standard, foreign currency assets have risen from $541 billion in the week ended June 26, with total reserves having fallen to $666.9 billion in the week ended June 26 as the RBI sold dollars to contain volatility in the foreign exchange market amid the West Asia crisis. The central bank has since continued to intervene, including through dollar-rupee sell/buy swaps. According to The Economic Times, RBI Governor Sanjay Malhotra said Friday that the higher-than-expected flow prompted the RBI to close the FCNR-B window on August 31, instead of September 30. The swap facility for FCNR-B inflows ended September 11, while the dollar-mobilisation scheme through external commercial borrowing and overseas foreign currency borrowing will continue till December 31. Market participants expect foreign currency assets to rise further as additional foreign currency inflows are likely to continue until the second week of September, potentially taking FCAs above $655 billion.
