India’s Forex Reserves Reach a Three-Month High

India's Dollar Savings Hit a 3-Month High

India's foreign exchange reserves the stock of dollars and other foreign currency the RBI holds rose to USD 692.9 billion on 31 July 2026.

• That is up about USD 10.5 billion in just one week - the biggest weekly jump since the end of January 2026
• Think of reserves as the country's emergency dollar savings account
• But note: reserves were around USD 728 billion in February 2026. So we are still about USD 35 billion below the peak. This is a recovery, not a new record.

Why Did Reserves Go Up?

The main reason is a special RBI scheme that encourages NRIs to park dollars in Indian banks.

• Banks have brought in about USD 36.7 billion through FCNR(B) deposits up to 31 July 2026
• FCNR(B) = a fixed deposit an NRI keeps in dollars, not rupees
• Banks hand these dollars to the RBI in exchange for rupees, and the RBI covers the currency risk free of cost
• NRIs must open the deposit between 8 June and 30 September 2026. Banks can use the RBI window till 16 October 2026. Money is locked in for one year.

What Happened to the Rupee

The rupee ended the week at ₹95.35 per dollar - its best week in about four months (reported as a gain of 1.2% in one report and about 1% in another).Why the rupee got stronger that week:

• The RBI kept selling dollars in the market through government banks to support the rupee
• The US dollar weakened globally, and oil fell from USD 91.38 to USD 87.17 a barrel - cheaper oil means India needs fewer dollars to pay its import bills

The complete story: Over the whole month of July, the rupee actually fell about 0.7%, because oil rose 21% during the month on Middle East tensions. Only a week earlier, the rupee was close to an all-time low. One good week does not undo that.

Is India's Cushion Big Enough?

On 5 August 2026, RBI Governor Sanjay Malhotra said India's reserves remain adequate on standard measures, with import cover of over 10 months and external debt cover of 90.8%. The RBI kept interest rates unchanged the same day.In plain terms:

• Over 10 months of import cover - even if India earned zero foreign currency, it could keep paying for imports for more than 10 months
• 90.8% external debt cover - reserves can cover almost all of what India owes abroad
• This number was around 96% a year ago. So the cushion is comfortable, but slightly thinner than before.

What Comes Next, and What to Watch

• These dollars come with a return ticket. The RBI's forward book — its promise to hand back dollars in future — is about USD 103.3 billion, close to the record USD 106.7 billion of May 2026. Analysts say such commitments reduce how much of the reserves is truly "usable", because those dollars will have to be paid out later.
• Much of the money is already being used up. "By 17 July the measures had brought in USD 20.7 billion across all three routes USD 17.4 billion of it FCNR(B) but reserves rose only about USD 3 billion up to 10 July"
• Not every weekly change is about deposits. Reserves also move with gold prices, currency valuations, RBI market operations and India's IMF position.
• Risks remain. Oil prices, foreign investor flows, geopolitics and global interest rates can all pull the rupee back down.