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India foreign-exchange reserves post record weekly drop as RBI defends rupee

India foreign-exchange reserves post record weekly drop as RBI defends rupee

Money Moves

Central bank sold dollars and ran swaps to support the rupee; reserves fell $18.3 billion in a week to $747.6 billion.

Yesterday: RBI reports record $18.34 billion weekly drop

Overview

Updated 1 hour ago

India's foreign-exchange reserves fell $18.34 billion to $747.56 billion in the week ended September 25, the largest weekly drop on record. The Reserve Bank of India sold dollars and ran sell-buy swaps to keep the rupee from sliding further.

The decline is the third straight weekly fall, cutting about $38 billion since reserves peaked at $785.7 billion on September 4. The rupee is among Asia's weakest currencies this year, squeezed by crude oil above $100 a barrel, rising US Treasury yields, and foreign investors pulling money out of Indian markets.

Why it matters

If the drain continues, India's shock cushion thins, and a weaker rupee raises the cost of imported oil and fuels inflation.

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Key Indicators

$18.34B
Weekly reserve decline (week ended Sept 25)
Largest one-week fall on record, per RBI data.
$747.56B
Total foreign-exchange reserves
Level as of September 25, down from the peak reached three weeks earlier.
$785.7B
Peak reserves (September 4)
Record high reached after $143.6 billion in FCNR(B) swap inflows.
96.31
Rupee per US dollar (October 1)
Largest daily drop in over two months, with Brent crude above $100 a barrel.

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Organizations Involved

Reserve Bank of India
Reserve Bank of India
Central Bank
Intervening in foreign-exchange markets to support the rupee

India's central bank, which manages foreign-exchange reserves and intervenes in currency markets.

Timeline

June 2026 October 2026

5 events Latest: Yesterday
Tap a bar to jump to that date

  1. RBI reports record $18.34 billion weekly drop

    Latest Data release

    Reserves fall to $747.56 billion for the week ended September 25, the biggest weekly decline on record, on dollar sales and swaps.

  2. Rupee falls to 96.31 per dollar

    Market

    Largest daily drop in over two months as Brent tops $100 and US 10-year yields rise to 5.34%.

  3. Reserves fall $14.9 billion to $765.9 billion

    Market intervention

    First notable weekly decline as the RBI steps in, the sharpest fall since November 2024.

  4. Reserves hit record $785.7 billion

    Milestone

    The FCNR(B) swap window pulls in $143.6 billion in foreign currency inflows, lifting reserves to an all-time high.

  5. Reserves drop to $666.9 billion

    Market intervention

    The RBI sells dollars as the West Asia crisis pressures the rupee, pulling reserves to a recent low.

Scenarios

1

Oil eases, foreign inflows return, reserves stabilize

Possible Resolves by Nov 15, 2026

Discussed by: Market commentary in Business Standard and Bloomberg

Brent falls back below $100 a barrel as supply concerns fade, and foreign investors resume buying Indian assets. The RBI pauses heavy intervention, the rupee firms, and weekly reports show reserves rising again.

2

Oil stays high, reserve drain stretches past $70 billion

Likely Resolves by Nov 15, 2026

Discussed by: Business Standard analysis of RBI intervention patterns

Crude stays above $100 and outflows continue. The RBI keeps selling dollars and running swaps, and reserves fall below $710 billion, extending the post-peak decline past $75 billion. The rupee drifts lower despite intervention.

3

RBI lets the rupee fall, halting the reserve drain

Possible Resolves by Nov 15, 2026

Discussed by: Currency strategists cited by Bloomberg

Facing diminishing returns from intervention, the RBI allows a sharper depreciation instead of selling more dollars. The rupee crosses 98 per dollar, foreign buyers return on cheaper valuations, and reserve depletion slows sharply.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

1990-1991

India's balance of payments crisis (1991)

By January 1991, India's foreign-exchange reserves had fallen to roughly $1.1 billion, barely enough for two weeks of imports. The government pledged 67 tonnes of gold to secure a $2.2 billion loan from the International Monetary Fund.

Then

India secured the loan, devalued the rupee, and began sweeping economic reforms.

Now

The crisis triggered liberalization and pushed policymakers to maintain far larger reserve buffers as insurance.

Why this matters now

It marks the extreme low end of the scale India measures itself against: near-empty reserves leading to an international bailout.

May-August 2013

The taper tantrum (2013)

When the US Federal Reserve signaled it would slow bond purchases, foreign investors fled emerging markets. India's rupee fell from about 55 to a low near 68.85 per dollar as the current account deficit widened, and the RBI sold dollars and later raised rates.

Then

Reserves fell and the rupee kept sliding until the Fed delayed tapering and new governor Raghuram Rajan took office, stabilizing the currency near 61.

Now

The episode exposed India's external vulnerabilities and deepened the policy consensus on building a large reserve buffer.

Why this matters now

It shows the same mechanism at work: a central bank draining reserves and tightening policy to defend a currency under external pressure.

Sources

(7)
+1
Reserve Bank of India Mint Business Standard The Economic Times Briefs Rediff Akashvani News