India's forex reserves experienced significant growth during the week ended July 31, rising by $10.512 billion to $692.866 billion, according to the Reserve Bank of India (RBI). This represents the highest weekly gain since January 30, demonstrating the country's continued strengthening of its external financial position. The current reserves level represents the highest point in more than two months, pushing the country's reserves to their strongest level since the previous surge. The latest increase follows a $6.118 billion rise in the previous reporting week, when the country's forex reserves stood at $682.35 billion. The RBI's weekly statistical supplement showed that the country's foreign exchange reserves continued to strengthen after recovering from the decline witnessed earlier this year amid heightened global uncertainties.
Foreign currency assets, the major component of reserves, increased by $8.75 billion to $564.68 billion for the week ended July 31, as reported by the RBI. The value of gold reserves also contributed positively, rising by $1.685 billion to $104.743 billion. Special Drawing Rights (SDRs) increased by $48 million to $18.666 billion, while India's reserve position with the IMF rose by $28 million to $4.778 billion at the end of the reporting week. Market participants attributed the foreign currency assets increase to RBI's net dollar purchases of around $4.1 billion, with the remainder of the increase largely due to revaluation gains as the dollar weakened during the week. As per Gaura Sen Gupta, economist at IDFC First Bank, the $4.1 billion represents actual dollar buying by the central bank.
The current reserve levels reflect the RBI's intervention in the forex market through dollar sales during periods of rupee pressure. During the current month, the central bank has resumed dollar purchases amid sustained foreign exchange inflows, helping rebuild the reserves after previous interventions to curb excessive volatility in the rupee. The foreign currency assets are expressed in dollar terms and include effects of appreciation or depreciation of non-US units such as the euro, pound, and yen held in the foreign exchange reserves. However, market participants noted that only around half of total inflows through FCNR(B), ECB and OFCB stood at around $40.8 billion as of July 31 have translated into actual dollar purchases by the RBI, as the central bank has been allowing existing forward positions to mature and selling dollars in the spot market to contain rupee depreciation.
The central bank and government have implemented a series of measures to attract more forex flows into the country, including the FCNR(B) measure, as reported by the RBI. The country has so far received $32 billion under these schemes, demonstrating the effectiveness of these policy interventions in strengthening India's external financial position and supporting the overall forex reserves growth trajectory. RBI Governor Sanjay Malhotra confirmed this week that there is no proposal to prematurely close the Foreign Currency Non-Resident (Bank), or FCNR (B), deposit incentive scheme. The scheme has driven robust capital inflows into the country, enabling Indian banks to mobilise $36.7 billion through FCNR deposits as of July 31, 2026, which has helped to steady the rupee compared to the US dollar, at a time when it had begun to slide amid rising oil prices in the global market. Since May 11, Prime Minister Narendra Modi has repeatedly urged citizens to help conserve foreign exchange by cutting discretionary overseas travel, reducing fuel consumption and refraining from buying gold for a year, contributing to the current reserve buildup.
Driven by these massive FCNR inflows, India's headline foreign exchange reserves are expected to cross the $700 billion milestone in the coming weeks, according to recent reports. The concessional zero-cost swap facility offered by the RBI remains fully operational and is scheduled to run through its original deadline of September 30, 2026. This facility has been instrumental in supporting the country's forex reserves and maintaining stability in the foreign exchange market during periods of volatility. The sustained growth in reserves reflects the effectiveness of the RBI's intervention measures and government conservation initiatives, positioning India well for future economic challenges while maintaining adequate foreign exchange buffers.
