The Reserve Bank of India purchased $4.2 billion in the spot forex market during the week ended May 9, 2026, taking its total foreign exchange reserves to a record $682 billion. The central bank has been an active buyer of dollars in recent weeks, taking advantage of strong FII inflows to build reserves without allowing the rupee to appreciate excessively against the greenback.
India's forex reserves now provide over 11 months of import cover, well above the IMF-recommended minimum of three months. The RBI's reserve build-up strategy provides a buffer against potential future capital outflows in the event of global risk-off episodes, a deterioration in India's current account deficit, or unexpected shocks to the domestic economy from weather or geopolitical events.
The RBI's reserve management strategy has been widely praised by international economists as prudent. The central bank's forex reserves are invested in a diversified portfolio of assets including US Treasuries, gold and SDRs. India's gold reserves have increased to over 900 tonnes, contributing to the overall increase in reserve value. The RBI also actively uses forex swaps and forward contracts to manage exchange rate volatility efficiently.
