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India Moves Ahead of Russia After Record Forex Reserve Gain
India now has the fourth-largest foreign exchange reserve pile in the world.
Its reserves reached $785.71 billion after rising by almost $45 billion in one week.
Russia moved behind India because its reserves fell to $753.5 billion.
Much of India’s increase came from a special scheme that encouraged foreign-currency deposits.
These deposits and other borrowings must eventually be paid back.
The higher reserves give the Reserve Bank of India more dollars to use if the rupee needs support.
Some experts say the inflows may not mean that India’s economy has become structurally more attractive to foreign investors.
India’s foreign investors have also sold more stocks and bonds than they bought so far in 2026.
India’s foreign exchange reserves rose by $44.9 billion to a record $785.71 billion in the week ended September 4.
The increase moved India into fourth place globally, ahead of Russia, whose reserves fell to $753.5 billion.
The record gain was driven mainly by inflows through the Reserve Bank of India’s concessional FCNR(B) deposit swap scheme.
India’s reserves have increased for 10 consecutive weeks, giving the RBI greater capacity to support the rupee.
Experts cautioned that the inflows are borrowings requiring future repayment and may not reflect stronger underlying foreign investment.
- Who
- India, the Reserve Bank of India, Russia, and foreign investors are central to the development.
- What
- India’s foreign exchange reserves reached a record $785.71 billion, overtaking Russia’s reserves.
- Where
- The reserves are held by India and Russia’s respective central banking systems.
- When
- The figures refer to the week ended September 4, with additional inflow data reported through August 31.
- Why
- India’s increase was driven mainly by foreign-currency deposits and other inflows under concessional swap schemes.
Reserve Accumulation Supports Stability
Borrowed Inflows Carry Future Risks
Value of higher reserves
Reserve Accumulation Supports Stability
The record reserves give the Reserve Bank of India greater capacity to defend the rupee when necessary.
Borrowed Inflows Carry Future Risks
The increase partly reflects foreign borrowing rather than permanent capital, so the reserves create future repayment obligations.
Meaning of foreign inflows
Reserve Accumulation Supports Stability
The special swap schemes attracted a large amount of foreign currency and helped India build reserves for 10 consecutive weeks.
Borrowed Inflows Carry Future Risks
Sandeep Yadav said that, structurally, little had changed in India to justify expecting more foreign-exchange inflows.
Long-term reserve target
Reserve Accumulation Supports Stability
Former Reserve Bank of India Deputy Governor Michael Patra argued that India should target at least $1 trillion in reserves.
Borrowed Inflows Carry Future Risks
Concerns remain about repayments beginning in 2029, especially because foreign investors have been net sellers of Indian stocks and bonds.
Key facts
- India’s reserves
- $785.71 billion as of September 4
- Weekly increase
- $44.9 billion, India’s largest weekly gain on record
- Russia’s reserves
- $753.5 billion as of September 4
- Global ranking
- China first at $3.85 trillion, Japan second at $1.21 trillion, Switzerland third at $1.09 trillion, and India fourth
- FCNR(B) inflows
- $127.23 billion had entered by August 31
- Total special-drive inflows
- $136.38 billion through FCNR(B), OFCB, and ECB swap schemes by August 31
- Foreign portfolio flows
- Foreign investors had sold a net $17.8 billion of Indian stocks and bonds in 2026
Quotes
Michael Patra
Former Deputy Governor of the Reserve Bank of India
“Punting against such a level should be beyond the reach of the opportunistic and/or the faint-hearted.”
indianexpress.com
“structurally, nothing has changed in India to warrant more FX inflows”
indianexpress.com
Sources
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