India's FX Reserves Hit Record High Amid Inflows

India's foreign exchange reserves reached an unprecedented high of $785.7 billion in the week ending September 4, 2026. This milestone represents a continuous climb over ten weeks, accumulating nearly $120 billion during this period.

The significant expansion is largely fueled by policy measures introduced in June 2026 aimed at enhancing dollar inflows. These initiatives included discounted hedging facilities for overseas borrowings and a free-of-cost hedging option for banks to attract overseas FX deposits.

From June 5 to August 31, 2026, the Reserve Bank of India recorded $136.3 billion in inflows under these schemes. A substantial portion, $127 billion, came from non-resident Indian deposits, exceeding expectations and leading the central bank to shorten the deposit hedging window.

In the week ending September 4, foreign currency assets, a key component of the reserves, rose by $47.4 billion. However, the value of India's gold holdings saw a minor decrease, now standing at $113.8 billion. Analysts suggest that ongoing interventions by the Reserve Bank of India to manage the rupee's value may have partially offset the impact of these inflows.