India's forex reserves fall $2.69 billion to $717 billion: Why RBI is selling dollars and what it means for the rupee
Mint - Economy · Published 8 November 2026 · Last updated
India’s forex reserves slipped $2.69 billion to $717 billion in late October, mainly due to RBI dollar sales and the unwind of FCNR(B) swap inflows.
Key points
- The Reserve Bank of India reported a $2.69 billion fall in total foreign exchange reserves to $717.06 billion for the week ended 30 Oct 2026.
- Foreign currency assets, the largest reserve component, declined by $2.09 billion to $591.12 billion in the same period.
- Gold reserves dropped $559 million, reaching $102.59 billion, while SDRs fell $47 million to $18.56 billion.
- The RBI attributed part of the drawdown to dollar sales to support the rupee amid depreciation pressure.
- Another contributor was the deployment of funds raised under the FCNR(B) swap facility, which began on 8 June 2026.
- The swap scheme had mobilised $73 billion in foreign exchange by 21 Aug 2026, rising to over $136 billion by 31 Aug 2026.
- Despite the weekly dip, reserves remain $25.95 billion higher than the end‑March 2026 level and $27.32 billion above the same period last year.
- Analysts warn that a sustained fall could limit the RBI’s ability to intervene if rupee volatility intensifies.
Background
- In June 2026 the RBI introduced a special dollar‑rupee swap facility for FCNR(B) deposits to attract NRI dollar inflows.
- The facility allowed banks to raise fresh FCNR(B) deposits (3‑5 year tenures) and swap the dollars with the RBI, creating a temporary foreign‑exchange buffer.
- By early September 2026, these inflows helped push India’s forex reserves to a record $785.71 billion.
- The swap arrangement creates a future obligation for banks to repurchase dollars, meaning the inflows are not permanent additions to reserves.
- Historically, the RBI has used its reserve stock to smooth rupee volatility by selling dollars when the currency weakens.
- India’s external position has been strengthening since FY 2025, with cumulative current‑account surpluses and higher foreign‑direct investment inflows.
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Original report: Mint - Economy