[Reserve Bank of India Achieives Record $18.65 Billion Net Dollar Purchase in July]
The Reserve Bank of India executed a record net purchase of $18.65 billion in July, surpassing the $561 million net buys recorded in June.
This climb reflects earlier gains in June 2021, when the RBI achieved a peak net purchase of $18.63 billion in the spot market. Growth stemmed from the launch of the bank’s concessional swap facilities for FCNR(B) deposits, external commercial borrowings, and overseas foreign‑currency borrowing in early June, which drew $40.82 billion in inflows by the end of the month. Financial institutions redirected these dollars to the RBI through the swap mechanism.
Experts note that the pronounced rise in July’s net dollar inflow was driven primarily by funds mobilized under the FCNR(B) initiative and related concessional swap windows, with banks selling such dollars directly to the central bank,
During July, the rupee depreciated by 0.71 percent. The RBI contracted $38.42 billion in purchases while offsetting those actions with $19.77 billion in sales throughout the month.
Over the preceding sixteen months, the RBI has operated as a net dollar seller in ten occasions, maintaining steady declines from August 2025 through December 2025. Peak activity occurred in October 2025, when net purchases topped $11.88 billion, before a pause in January and February 2026 and a resumption in March 2026.
The trajectory has flipped in fiscal 2027. After net sells in April and May, the RBI shifted to a net buyer in June and accelerated acquisitions in July. This $18.65 billion net acquisition lifted cumulative net dollar purchases for FY27 to $4.17 billion, overturning the downturn pattern of FY26.
India’s foreign exchange reserves rose to $692.87 billion by the end of July, up from $666.93 billion at the close of June—a monthly jump of approximately $26 billion. Reserves grew strongly throughout the month, with the final week of July contributing $10.51 billion, the steepest weekly increase since early January, owing to higher foreign‑currency assets and elevated gold holdings.
Data released by the RBI indicated that foreign exchange reserves stood at $765.9 billion for the week ending September 18.
The outstanding net short‑dollar exposure in the forward market hit a record $136.77 billion by the end of July, up from $103.33 billion recorded in June.
One‑month short‑term positions rose to $47.66 billion by the end of July, up from $40.33 billion in June, while multi‑year short positions grew to $91.54 billion from $64.21 billion over the same interval.
Within the $136 billion net short‑dollar pool, $15.59 billion consisted of one‑month contracts, and $7.32 billion covered one‑to‑three‑month tenors. Approximately $24.75 billion is scheduled to mature among three‑month‑to‑annual‑tenure contracts, and the remainder—$91.54 billion—spans contracts longer than a year. Meanwhile, the central bank maintained a $2.43 billion long position in one‑month contracts.
Authorities highlighted the urgency of avoiding maturities for these dollar exposures, citing risk of heightened rupee pressure amid ongoing geopolitical tensions; the RBI acknowledges these are borrowed funds destined for eventual repayment,
stated a Treasury official from a private institution.
Furthermore, as of August, the Indian rupee’s real effective exchange rate (REER) measured 88.92, slightly above July’s 88.69 level.
The REER adjusts the nominal effective exchange rate (NEER) by incorporating inflation differentials across key trading partners. A REER value exceeding 100 signals rupee appreciation relative to the base year, which may erode export competitiveness in global markets.
