India's foreign exchange reserves declined by approximately 60 billion dollars over a six-week period as the central bank intervened heavily to defend the rupee. Official data published in the weekly statistical supplement showed total reserves stood at 726.027 billion dollars on October 9, retreating from a lifetime peak of 785.706 billion dollars recorded on September 4. In the latest reporting week alone, total foreign reserve assets decreased by 8.578 billion dollars, according to the central bank's statistical bulletin.
In October 2026, the Reserve Bank of India officially affirmed that national foreign exchange reserves remain adequate under standard reserve metrics, providing an import cover of around 11 months against merchandise imports.
Between April and September 15, 2026, financial services recorded the largest institutional equity selloff with outflows of ₹47,030 crore, followed by oil, gas and consumable fuels with net selling of ₹33,359 crore.
For the reporting week ended October 9, 2026, India's Special Drawing Rights dipped by 109 million dollars to 18.548 billion dollars, while its reserve tranche position in the International Monetary Fund weakened by 10 million dollars to 4.78 billion dollars.
Foreign currency assets, which form the dominant component of national reserves, dropped by 7.142 billion dollars during the reporting week to 597.605 billion dollars. Across the preceding six weeks, foreign currency holdings contracted by 50.563 billion dollars amid sustained central bank dollar-selling operations. This rapid drawdown eroded approximately 35 percent of the 143.596 billion dollars mobilized by the Reserve Bank between June and August through specialized dollar swap windows. Meanwhile, the valuation of national gold reserves dropped by 1.319 billion dollars in the week ending October 8 to settle at 105.094 billion dollars.
In autumn 2026, the central bank's reserve defense included a single-week drop of about 18.3 billion dollars, marking the sharpest weekly decline on record amid intense currency volatility and dollar demand.
Under the dollar mobilization facility announced on June 5 and implemented from June 8, 2026, commercial banks were permitted to raise three- and five-year FCNR(B) deposits and swap the proceeds with the RBI at a concessional rate offsetting hedging costs, attracting $143.6 billion by September 18 with 93% via FCNR(B) deposits.
Sustained downward pressure on external balances has been exacerbated by persistent capital withdrawals by overseas institutional investors. Depository records from National Securities Depository Limited revealed that foreign portfolio investors have pulled a net 26.8 billion dollars from domestic capital markets year-to-date. At the interbank foreign exchange market, the Indian rupee depreciated by 22 paise to touch 96.57 against the United States dollar in morning trading. The local currency had opened at 96.37 before weakening to 96.57, slipping from its previous session settlement of 96.35 against the dollar.
To counter escalating currency depreciation and imported inflation pressures, the Reserve Bank of India raised the benchmark repo rate by 25 basis points to 5.50 percent. The monetary adjustment marks a direct policy reversal following previous easing measures, as central bank governors responded to geopolitical conflicts in West Asia. The central bank had maintained the repo rate at 6.50 percent through 2023 and 2024 before initiating rate reductions during 2025. Alongside the rate increase, the Monetary Policy Committee officially shifted its operational policy stance to calibrated tightening. Central bank authorities simultaneously revised India's fiscal 2027 inflation projection upward to 5.2 percent due to elevated global crude oil prices.
DBS Bank senior economist Radhika Rao noted that the policy rate increase acknowledges that cyclical inflationary risks are no longer benign. Rao explained that combining higher inflation forecasts with calibrated tightening will keep front-end interest rates biased higher across domestic debt markets. Senior economist Radhika Rao added that wider interest rate differentials should bolster currency resilience against external shocks, even as dollar strength remains a headwind. Compounding domestic pressures, the global dollar index rose 0.25 percent to trade at 102.09 against a basket of six major international currencies.
