India’s Forex Reserves Hit $740.8 Billion — Here’s What Drove the Jump

India’s foreign exchange reserves climbed to a fresh all-time high of $740.80 billion for the week ended August 28, Reserve Bank of India data showed on Friday, as the central bank’s dollar-deposit push kept the rupee’s defenses well stocked heading into a data-heavy September.

Nine Straight Weeks, Almost $75 Billion Richer

The reserves have now risen for nine consecutive weeks, adding nearly $75 billion over that stretch and comfortably surpassing the previous record of $729.33 billion set just seven days earlier, for the week ended August 21.

The pace of accumulation is among the sharpest sustained build-ups in the RBI’s history, and it has been driven less by traditional trade-surplus dynamics than by a deliberate policy push to pull in dollars from abroad.

Where the Extra Dollars Are Coming From

Much of the credit goes to a special swap facility the RBI rolled out in June to shore up the rupee. That month, the central bank unveiled discounted hedging facilities for overseas borrowings by state-run firms and banks, alongside a free-of-cost hedging window for banks raising foreign-currency deposits from non-resident Indians.

Between June 5 and August 31, the facility drew inflows of more than $136 billion, of which about $127 billion came from NRI deposits, the RBI said.

The central bank’s own disclosure breaks that figure down further: Foreign Currency Non-Resident (Bank) deposits, or FCNR(B) accounts, made up the overwhelming share of inflows at $127.2 billion, while Overseas Foreign Currency Borrowings added $5.26 billion and External Commercial Borrowings contributed $3.89 billion.

The window, which opened on June 8, was originally due to run until the end of September but was closed a month early after demand outpaced expectations.

Also Read: RBI Closed FCNR(B) Window as Inflows Surged Beyond Expectations

FCNR(B) Swap Facility Inflows (June 8 – August 31, 2026)

Gold Climbs, Currency Assets Still Dominate

Foreign currency assets, the largest component of the reserves, rose to $600.67 billion from $591.33 billion a week earlier and remain the single biggest driver of the headline number.

Gold holdings added roughly $2.19 billion to reach $116.41 billion, reflecting a mix of fresh accumulation and valuation gains, while Special Drawing Rights and India’s Reserve Tranche Position with the IMF were both little changed on the week.

Foreign Exchange Reserves Composition (US$ Million)

Because foreign currency assets are valued in dollar terms, the figure captures currency swings across the euro, pound and yen holdings the RBI keeps within that bucket, not just fresh dollar purchases.

That distinction matters for anyone trying to read a single week’s move as a pure signal of central bank buying.

Also Read: Forex Reserves Hit $707 Bn, Rupee Still Under Pressure

From Rupee Defense to Record Rebuild

The scale of the turnaround is worth dwelling on. Reserves had touched an earlier all-time high of roughly $728.5 billion in the week ended February 27, 2026, according to RBI data, before a stretch of rupee pressure tied to global oil-price swings and broader dollar strength pushed the central bank to draw the kitty down.

By the week ended May 22, reserves had slipped to about $681.4 billion, a drop of nearly $47 billion from that February peak, as the RBI leaned on its reserves rather than only on rate policy to cushion the currency.

The FCNR(B) facility launched days later, on June 8, effectively swapped that strategy: instead of spending reserves to defend the rupee, the RBI began paying banks to bring dollars in, rebuilding the buffer at the same time.

Friday’s $740.80 billion print sits roughly $12 billion above the February peak, meaning the RBI has now more than recovered the ground it gave up earlier in the year, and then some, largely on the back of the deposit scheme rather than a rebound in the current account.

Rupee Firms as RBI’s War Chest Swells

The rupee itself edged up 0.3% against the dollar over the week to close at 95.3775, a modest but notable move given the currency’s rocky year.

HSBC said in a note that the inflow gives the RBI strong spot reserves it can lean on to stabilise or strengthen the rupee going forward, an important buffer at a time when global rate expectations and crude oil prices remain key swing factors for the currency.

The reserves figure also includes India’s Reserve Tranche Position at the IMF, a technical component that rarely moves the headline number by much but is counted in the RBI’s official weekly tally alongside gold, foreign currency assets and SDRs.

With the FCNR(B) window now shut and the reserve build-up increasingly reliant on valuation effects and routine RBI market operations, the pace of weekly gains may moderate from here even if the overall trend of accumulation holds.

What It Means for Markets

For traders, the read-through is less about the headline number and more about optionality.

A record reserve buffer gives the RBI more room to lean against sharp rupee moves in either direction without worrying about depleting its war chest, which typically translates into a tighter, more range-bound band for the currency in the near term.

That matters most for rupee-sensitive sectors: IT and pharma exporters, which earn in dollars, tend to watch reserve trends as a proxy for how actively the RBI might cap rupee weakness that would otherwise pad their margins, while oil marketing companies and other large importers benefit when the central bank has the firepower to prevent runaway depreciation.

None of this points to a specific market call, but a fully stocked reserve position is generally read as a stabilising signal rather than a directional one.

Need to Know

• India’s forex reserves hit a record $740.80 billion for the week ended August 28, 2026, up from $729.33 billion a week earlier.
• This is the ninth consecutive weekly rise, adding almost $75 billion to the reserves over that period.
• The RBI’s FCNR(B)/OFCB/ECB swap facility, open June 8–August 31, 2026, drew over $136 billion in inflows, with $127.2 billion from NRI FCNR(B) deposits alone.
• The facility was closed a month ahead of its original September 30 schedule after inflows outpaced expectations.
• Reserves are now roughly $12 billion above the previous record of about $728.5 billion set in February 2026, before a mid-year drawdown to defend the rupee.
• The rupee rose 0.3% on the week to close at 95.3775 against the dollar.

Read Next: RBI ₹7 Lakh Crore VRRR: Banks Face a New Liquidity Test

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security or currency. Reserve and exchange-rate figures are as reported by the RBI and are subject to revision. Readers should consult a SEBI-registered investment advisor before making any investment decisions.