Forex kitty swells to new high of $740.8 bn on dollar inflows

MUMBAI: India's forex reserves jumped by $11.475 billion to a new all-time high of $740.803 billion in the week ended August 28, buoyed by record dollar inflows from non-resident Indians (NRIs) through the higher-priced FCNR deposit window, which the Reserve Bank opened between June 8 and August 31 to shore up the forex kitty as the rupee came under pressure due to the Iran war.

Since June, the forex reserves had risen by close to $74 billion. In the previous reporting week, the forex kitty rose by $12.422 billion to $729.328 billion, a new high, eclipsing the previous all-time record of $728.5 billion achieved in the week ended February 27, 2026.

Since the Iran war began, the rupee has been under tremendous pressure. The local unit closed the last fiscal year with a loss of 5.8%, on top of a 9.9% decline in the previous fiscal year.

The rupee closed on Friday with a 10-paise gain at 94.49. The unit gained nearly 1.2% during the week to hit a more than 10-week high.

However, the record dollar haul has not had too much of an impact on the rupee, which has gained only about 1% between June 8 and now, after hitting a lifetime low of 96.87 on May 20. This was the major reason for opening the forex swap windows through fully RBI-hedged FCNR deposits, external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs).

Through these windows, banks mopped up a whopping $136.38 billion, of which as much as 92%, or $127.23 billion, were NRI deposits, which were priced between 6.20% and 7%.

In the weekly statistical supplement issued on Friday, the RBI said the reserves rose by $11.475 billion to a new all-time high of $740.803 billion during the week ended August 28.

Of the total, foreign currency assets, a major component of the reserves, rose by $9.337 billion to $600.67 billion. Expressed in dollar terms, foreign currency assets include the effects of appreciation or depreciation of non-dollar units such as the euro, pound and yen held in the foreign exchange reserves.

The value of gold reserves also rose by $2.191 billion to $116.409 billion during the week, the RBI said. The special drawing rights, however, were down by $43 million to $18.81 billion, while the reserve position with the IMF declined by $11 million to $4.914 billion.