Archive · 12 Sep 2026
India Overtakes Russia After Record Forex Reserve Gain
India now has the fourth-largest foreign exchange reserve holdings in the world.
Its reserves reached about $785.7 billion after rising by almost $45 billion in one week.
Russia fell behind India because its reserves dropped to $753.5 billion.
Much of India’s increase came from a special program that attracted foreign-currency deposits and other borrowings.
The Reserve Bank of India can use these reserves to help support the rupee.
However, the money brought in through these programs must eventually be paid back.
Some experts say this does not necessarily mean that India has become much more attractive to foreign investors.
Foreign investors have also sold more Indian stocks and bonds than they bought in 2026.
The rupee remains under pressure from expensive crude oil and higher United States Treasury yields.
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 ahead of Russia into fourth place globally, behind China, Japan and Switzerland.
Foreign currency assets rose by $47.5 billion, mainly because of inflows under the Reserve Bank of India’s concessional swap schemes.
FCNR(B) deposits accounted for $127.23 billion of the $136.38 billion raised through the special forex drive by August 31.
Analysts said the higher reserves support the rupee, but cautioned that much of the inflow represents borrowing that will require future repayment.
- Who
- India, the Reserve Bank of India, Russia, foreign investors and participating banks are central to the development.
- What
- India’s foreign exchange reserves reached a record $785.71 billion, overtaking Russia in the global rankings.
- When
- The reserve figures refer to the week ended September 4; inflow figures were reported through August 31.
- Where
- The development concerns India’s and Russia’s foreign exchange reserves and the RBI’s swap facilities.
- Why
- India’s reserves increased mainly because of foreign-currency inflows through FCNR(B), Overseas Foreign Currency Borrowings and External Commercial Borrowings swap schemes.
Higher Reserves Strengthen Stability
Borrowed Inflows Create Future Risks
Role of reserve accumulation
Higher Reserves Strengthen Stability
The higher reserves give the Reserve Bank of India greater capacity to support or defend the rupee during periods of pressure.
Borrowed Inflows Create Future Risks
The increase partly reflects foreign borrowing and swap arrangements, rather than permanent investment, creating future repayment obligations.
Meaning of the inflows
Higher Reserves Strengthen Stability
The concessional swap schemes attracted substantial foreign currency and helped reserves rise for 10 consecutive weeks.
Borrowed Inflows Create Future Risks
Sandeep Yadav said that structurally, little had changed in India to justify expecting substantially more foreign-exchange inflows.
Long-term outlook
Higher Reserves Strengthen Stability
Former Reserve Bank of India Deputy Governor Michael Patra has argued that India should target reserves of at least $1 trillion.
Borrowed Inflows Create Future Risks
Repayments on FCNR(B) deposits are expected to begin in 2029, while foreign investors have been net sellers of Indian stocks and bonds in 2026.
- India’s reserves
- $785.71 billion as of September 4
- Weekly increase
- $44.9 billion, the largest weekly gain on record
- Russia’s reserves
- $753.5 billion as of September 4, down $20.7 billion from the previous week
- Global ranking
- China ranked first at $3.85 trillion, followed by Japan at $1.21 trillion, Switzerland at $1.09 trillion and India
- Foreign-currency assets
- $648.17 billion after rising $47.5 billion during the week
- Special-drive inflows
- $136.38 billion by August 31, including $127.23 billion through FCNR(B) deposits
- Foreign portfolio flows
- Foreign investors sold a net $17.8 billion of Indian stocks and bonds in 2026
