Mumbai — The Reserve Bank of India (RBI) purchased a record $43.26 billion in U.S. dollars on a net basis in August, more than doubling its purchases from the previous month as foreign currency funds raised through a special swap facility flowed back to the central bank.
According to the RBI’s latest monthly bulletin, the central bank bought $74.47 billion and sold $31.21 billion in the foreign exchange market during August, resulting in net purchases of $43.26 billion. That compared with net purchases of $18.65 billion in July.
The surge was primarily driven by funds raised through the RBI’s concessional swap facility, which covered Foreign Currency Non-Resident Bank (FCNR(B)) deposits, external commercial borrowings and overseas foreign currency borrowings.
Banks participating in the program channeled the dollars they raised back to the central bank through the swap arrangement, contributing to the sharp increase in foreign exchange purchases.
The RBI had moved up the facility’s closing date to August 31 from September 30 after banks raised $52.3 billion under the program by August 14.
The record purchases marked a significant shift in the central bank’s foreign exchange intervention strategy.
The RBI had been a net seller of dollars in 10 of the 17 months through August, including five consecutive months from August through December 2025. After halting net sales in January and February 2026, the central bank resumed selling dollars in March.
That pattern began changing during the current fiscal year. Following net dollar sales in April and May, the RBI returned to net purchases in June before substantially increasing its buying activity in July and August.
As a result, cumulative net dollar purchases during fiscal 2027 reached $47.43 billion at the end of August, compared with just $4.17 billion at the end of July.
The purchases have nearly offset the $53.13 billion in net dollar sales recorded during the previous fiscal year.
Meanwhile, the RBI’s activity in the forward foreign exchange market also expanded considerably.
The central bank’s outstanding net short dollar position in the forward market climbed to a record $200.06 billion at the end of August, compared with $136.77 billion in July. The increase represented an expansion of approximately $63 billion in a single month.
Short-dollar positions with maturities of less than one year rose to $55.15 billion from $47.66 billion, while positions extending beyond one year nearly doubled to $176.57 billion from $91.54 billion.
The RBI also significantly increased its long dollar positions, which climbed to $31.66 billion at the end of August from $2.43 billion in July.
Because those long positions were scheduled to mature within one month, the central bank’s adjusted net short position for contracts maturing within a year declined to approximately $23.5 billion in August, compared with $45.2 billion the previous month.
The latest figures highlight the growing importance of foreign currency swap arrangements in the RBI’s management of dollar liquidity and its broader foreign exchange operations. (Source: IANS)
