The Reserve Bank of India’s (RBI) net forward dollar liabilities reached a record $200 billion in August 2026, rising by about $63 billion in a month from nearly $137 billion in July, according to RBI data reported by Reuters. The increase followed a surge in policy-induced foreign-currency inflows, particularly through the special FCNR(B) deposit facility introduced by the central bank.
The RBI’s measures attracted $143.5 billion in foreign-currency inflows between June 8 and September 18, of which nearly $133 billion came through foreign-currency deposits. The inflows helped lift India’s foreign-exchange reserves to a record $785.7 billion in the week ended September 4. Under the swap arrangement, banks transferred the dollars to the RBI in exchange for rupees, increasing reserves while creating corresponding forward dollar liabilities for the central bank.
The RBI has subsequently been using dollar-rupee sell/buy swaps, mainly with maturities between three months and one year, which market participants expect will gradually reduce the forward book while also absorbing excess rupee liquidity. Foreign-exchange operations have already absorbed an estimated $20 billion of excess rupee liquidity. The development highlights the close link between foreign-exchange management, banking-system liquidity and balance-sheet risk as the RBI manages the unusually large inflows generated by the FCNR(B) facility.
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