Archive · 29 Aug 2026
India Forex Reserves Reach Record High After RBI Dollar Measures
India keeps money in foreign currencies as a safety cushion, called foreign-exchange reserves.
These reserves reached a record $729.3 billion in the week of 21 August.
The increase happened after the Reserve Bank of India encouraged overseas Indians and others to bring dollars into the country.
About $72.8 billion flowed in through the program.
Having more dollars can help the central bank support India’s rupee.
The rupee has recovered about 1.7% from its record low in May but is still affected by expensive oil imports.
However, attracting these dollars costs money because the central bank helps cover banks’ hedging expenses.
One analyst estimated the program’s yearly cost could be about $5.7 billion.
India’s foreign-exchange reserves rose $12.4 billion to a record $729.3 billion in the week of 21 August.
The new total exceeded the previous record of $728.5 billion reached in February.
RBI measures introduced in early June generated $72.8 billion in inflows through 21 August.
The reserves give the central bank greater capacity to support the rupee, which remains under pressure from high oil prices.
Analyst Dhananjay Sinha said the diaspora deposit program could cost India about $5.7 billion annually in carry costs.
- Who
- The Reserve Bank of India, overseas depositors, Indian banks, and analyst Dhananjay Sinha.
- What
- India’s foreign-exchange reserves reached a record $729.3 billion after dollar inflows increased.
- When
- The record was reported for the week of 21 August; RBI measures began in early June.
- Where
- India and overseas markets connected through the diaspora deposit program.
- Why
- The RBI sought to attract capital, strengthen external finances, and gain more capacity to support the rupee.
Benefits of Dollar Inflows
Costs and Risks of the Strategy
Supporting the rupee
Benefits of Dollar Inflows
Higher reserves give the RBI more firepower to support the rupee and cushion India’s external finances.
Costs and Risks of the Strategy
Dhananjay Sinha said debt-funded reserve mobilization has acute limitations as a way to stabilize the rupee.
Attracting overseas deposits
Benefits of Dollar Inflows
The special deposit program generated $72.8 billion in inflows and helped prevent a potential third consecutive year of a broad external-flow deficit.
Costs and Risks of the Strategy
The RBI is bearing banks’ hedging costs, while higher US interest rates make the program more expensive than the comparable 2013 effort.
Long-term financial impact
Benefits of Dollar Inflows
Stronger reserves provide a larger buffer while the rupee faces pressure from elevated oil prices and fuel-import dependence.
Costs and Risks of the Strategy
Sinha estimated the program’s carry cost for India could be around $5.7 billion annually because reserve-asset returns are lower than the cost of raising the funds.
- Record reserves
- $729.3 billion in the week of 21 August
- Weekly increase
- $12.4 billion
- Previous record
- $728.5 billion in February
- Program inflows
- $72.8 billion through 21 August
- Rupee recovery
- About 1.7% from its record low in May
- Estimated annual carry cost
- About $5.7 billion, according to Dhananjay Sinha
- Program status
- The RBI unexpectedly brought forward the program’s closure earlier this month