India's foreign exchange reserves are the country's savings in foreign money and gold, held and managed by the Reserve Bank of India. On 16 October 2026 they stood at US$721.0 billion, down from a record US$785.7 billion on 4 September 2026. In 1991 they were only US$5.8 billion. This part explains what the reserves are made of, how the RBI invests them, how to judge whether they are enough, why the gold share has risen, and what holding them costs. It finishes with the 2026 story: a record built on swap-driven inflows, then a fall as the RBI sold dollars to steady the rupee.
Part 1 charts the reserves from 1991 to 2026, so that chart is not repeated here. Reserves are one tool of exchange rate management (Part 16). They also sit on the asset side of the RBI balance sheet (Part 13), and their valuation gains and losses feed into the RBI's surplus transfer (Part 14).
In the news
- 23 October 2026: reserves fall to US$721.0 billion. The Weekly Statistical Supplement put reserves at US$721,016 million for the week ended 16 October, down US$5,011 million in the week. This was the sixth weekly fall in a row and left reserves US$64.7 billion below the September record. Why it matters for the exam: the WSS comes out every Friday, with data for the previous Friday.
- 10 October 2026: curbs on rupee speculation and a dollar window for oil companies. The RBI restricted the rebooking of cancelled rupee derivative contracts and cut the threshold for hedging without proving an underlying exposure from US$100 million to US$5 million. It also introduced a Foreign Exchange Risk Reserve (20% of the rupee value of certain derivative contracts, kept in cash with the RBI). From 12 October it began selling dollars directly to IOC, HPCL and BPCL to cover all their daily needs. Why it matters for the exam: by taking oil companies' dollar buying out of the spot market, the RBI eases pressure on the rupee without having to sell as many dollars in that market.
- 7 October 2026: "adequate by standard metrics". The Governor's statement said reserves gave an import cover of about 11 months and covered 94.4% of external debt. Why it matters for the exam: these two numbers are the RBI's own headline adequacy measures.
- 30 September 2026: external debt at US$778.2 billion. At end-June 2026, short-term debt by residual maturity was 50.5% of reserves, and short-term debt by original maturity was 23.0% of reserves. Why it matters for the exam: India meets the Greenspan–Guidotti rule about twice over.
- 11 September 2026: a record US$785.7 billion. Reserves rose by US$44.9 billion in the week ended 4 September, the largest weekly rise on record, as banks swapped dollars raised through FCNR(B) deposits with the RBI. Why it matters for the exam: the record came from borrowed money that must be repaid when the swaps mature, not from a trade surplus.
- 14 August 2026: FCNR(B) window cut short. Because the response was so strong, the RBI closed the swap window for FCNR(B) deposits to deposits raised after 31 August, a month earlier than first planned. By 18 September the scheme had brought in US$143.6 billion, of which US$133.0 billion came as FCNR(B) deposits. Why it matters for the exam: FCNR(B) deposits are foreign-currency deposits held by NRIs with Indian banks.
- 5 June 2026: concessional swaps announced. To support the balance of payments, the Governor offered concessional forex swaps for ECBs by public sector firms, and offered to bear the full hedging cost for fresh 3–5 year FCNR(B) deposits. The facility opened on 8 June. Two days earlier, on 3 June, the RBI had denied media reports that it was selling gold: its stock was unchanged at 880.52 tonnes. Why it matters for the exam: gold holdings are published in tonnes in the RBI Bulletin.
- 30 April 2026: 46th half-yearly report on reserve management. Gold's share of reserves rose to 16.70% at end-March 2026, and 680.05 of the RBI's 880.52 tonnes of gold were held in India. Why it matters for the exam: this report is the main official source for how the reserves are invested.
What counts as reserves
The definition
Reserves are external assets that the monetary authority controls and can use at once to finance a balance of payments gap, intervene in the currency market or keep confidence. India follows the IMF's definition and publishes the data in the IMF's Special Data Dissemination Standard (SDDS) template. All four components are reported in US dollars, although the foreign currency assets are actually held in several currencies.
The four components
| Component | What it is | 16 October 2026 (US$ million) | Share |
|---|---|---|---|
| Foreign Currency Assets (FCA) | Foreign government bonds, treasury bills and deposits in US dollars, euros, pounds, yen and other currencies | 591,847 | 82.1% |
| Gold | The RBI's gold, held in India and abroad, valued at market prices | 105,800 | 14.7% |
| Special Drawing Rights (SDRs) | The IMF's reserve asset, allocated to members and valued against a basket of five currencies | 18,578 | 2.6% |
| Reserve Tranche Position (RTP) | The part of India's IMF quota that India can draw on at any time, with no conditions | 4,791 | 0.7% |
| Total | 721,016 | 100% |
Source: RBI Weekly Statistical Supplement, 23 October 2026. In rupees, the total was ₹68,46,160 crore.
A few points to note:
- FCA is most of the reserves. It also includes the effect of other currencies' movements against the dollar. When the euro or yen weakens against the dollar, FCA falls in dollar terms even if the RBI has sold nothing.
- What FCA leaves out. The WSS excludes from FCA the RBI's SDR holdings (counted under SDRs), its investment in bonds of IIFC (UK), sums lent under the SAARC and ACU swap arrangements, and its contribution to funding Nexus Global Payments, the cross-border fast-payments project.
- SDRs are not a currency. An SDR is a claim on freely usable currencies of IMF members. India held about SDR 13,714 million at end-March 2026.
- The reserve tranche is the part of India's IMF quota paid in reserve assets, less the IMF's use of India's currency. It counts as a reserve because India can draw it automatically.
Worked example: the shares
Using the 16 October 2026 figures:
- Gold share = 105,800 ÷ 721,016 = 14.67%
- FCA share = 591,847 ÷ 721,016 = 82.09%
- SDRs + RTP = (18,578 + 4,791) ÷ 721,016 = 23,369 ÷ 721,016 = 3.24%
The gold share was 16.70% at end-March 2026. It fell to 14.67% by mid-October because gold's value dropped (from US$115.4 billion to US$105.8 billion) while FCA rose with the swap inflows.
The 2026 story: a record, then a fall
January to June: up, then down
Reserves started 2026 at US$686.8 billion (2 January). A rise in gold prices lifted them to US$723.8 billion by 30 January and US$728.5 billion on 27 February. They then fell to US$691.1 billion at end-March and to the year's low of US$666.9 billion on 26 June.
The RBI's sources-of-variation data explain the fall. In April–June 2026 reserves fell by US$22.5 billion. US$14.4 billion of that was a valuation loss, from a lower gold price and a stronger dollar. The other US$8.1 billion was a fall on a balance of payments basis: portfolio investors took out US$9.6 billion and the current account deficit was US$4.2 billion.
June to September: the swap window
On 5 June 2026 the Governor announced measures to draw in foreign capital, including:
- a concessional forex swap to encourage external commercial borrowings (ECBs) by public sector undertakings;
- the RBI bearing the full hedging cost for banks raising fresh 3–5 year FCNR(B) deposits;
- wider access for foreign investors to government bonds.
The facility opened on 8 June. A bank that raised dollars through FCNR(B) deposits swapped them with the RBI: it sold the dollars to the RBI now and agreed to buy them back when the deposit matured. The dollars went straight into reserves, and the RBI took on a forward obligation to deliver them back later.
The inflows grew quickly: US$20.7 billion by 17 July, US$56.8 billion by 13 August, and US$143.6 billion by 18 September (FCNR(B) US$133.0 billion, overseas foreign currency borrowings US$5.3 billion, ECBs US$5.3 billion). Reserves rose for ten weeks in a row, from US$666.9 billion to US$785.7 billion on 4 September, including a record weekly jump of US$44.9 billion in the last week. That week, FCA rose to US$648.2 billion while gold slipped to US$113.8 billion.
September to October: why reserves fell
From the record, reserves fell for six weeks in a row, to US$721.0 billion on 16 October. That is a fall of US$64.7 billion (8.2%).
| 4 Sep 2026 | 16 Oct 2026 | Change | |
|---|---|---|---|
| FCA | 648,168 | 591,847 | −56,321 |
| Gold | 113,816 | 105,800 | −8,016 |
| SDRs | 18,806 | 18,578 | −228 |
| RTP | 4,916 | 4,791 | −125 |
| Total (US$ million) | 785,706 | 721,016 | −64,690 |
Most of the fall was in FCA. The main reasons:
- Defending the rupee. The rupee came under pressure from high oil prices during the Iran war, a wider current account deficit and foreign portfolio outflows. It weakened to about 96.8 per dollar in early October before recovering to about 95. The RBI sold dollars to slow the fall. Nomura estimated (as reported by CNBC) that dollar sales had cut reserves by about US$51 billion by early October.
- Valuation. Gold fell by US$8.0 billion over the period, and FCA held in euros, yen and pounds also moves with exchange rates.
- Deployment of FCNR(B) money. Commentators also pointed to banks using the FCNR(B) resources.
On 10 October the RBI added non-reserve tools: curbs on speculative derivatives, a Foreign Exchange Risk Reserve, and a special window to sell dollars directly to the three public sector oil marketing companies. The aim is to reduce how much reserves have to be spent in the spot market.
Gross reserves and the forward book
The swap window shows why headline reserves can overstate how much is free to use. The RBI's net forward position (dollars it has agreed to deliver in future) was a payable of US$59.4 billion at end-September 2025 and US$103.1 billion at end-March 2026, before the FCNR(B) swaps were added. Nomura put forward dollar commitments at about US$200 billion after the June measures. Analysts therefore also look at net reserves: gross reserves minus net forward payables.
How much is enough? Adequacy measures
No single number says reserves are "enough". The RBI and the IMF look at several measures, each linked to a different risk.
1. Import cover
Import cover = reserves ÷ average monthly imports. It answers the question: if all foreign money stopped tomorrow, for how many months could India keep paying for its imports? The traditional benchmark is three months. The High Level Committee on the Balance of Payments, chaired by C. Rangarajan, suggested looking at payment obligations in addition to the usual 3–4 months of import cover.
The RBI quotes import cover against merchandise imports on a BoP basis. It was 10.8 months at end-December 2025, and the Governor put it at about 11 months in October 2026. Against imports of both goods and services, cover was around nine months at end-March 2026 (RBI Annual Report 2025-26).
Worked example. At end-March 2026, reserves were US$691.1 billion with cover of about 11 months. Implied monthly merchandise imports = 691.1 ÷ 11 = about US$62.8 billion. With reserves of US$721.0 billion and the same import bill, cover = 721.0 ÷ 62.8 = about 11.5 months.
2. Short-term debt cover and the Greenspan–Guidotti rule
The Greenspan–Guidotti rule says reserves should at least equal the external debt falling due within one year, so that a country could repay a year of debt even if no lender rolled it over. The IMF's 2016 guidance calls 100% cover of short-term debt "the most widely-used standard of adequacy" for emerging markets. The rule uses debt by residual maturity: short-term debt plus long-term debt falling due within the next 12 months.
India's figures at end-June 2026:
| Measure | End-March 2026 | End-June 2026 |
|---|---|---|
| Short-term debt (original maturity) ÷ reserves | 21.6% | 23.0% |
| Short-term debt (residual maturity) ÷ reserves | 47.3% | 50.5% |
| Total external debt | US$762.8 bn | US$778.2 bn |
| External debt ÷ GDP | 20.8% | 20.8% |
Worked example. Residual-maturity short-term debt was 50.5% of reserves, so reserves cover it 1 ÷ 0.505 = 1.98 times. That is about twice the Greenspan–Guidotti minimum. With reserves of about US$667 billion in late June, debt falling due within a year was about 0.505 × 667 = US$337 billion. Compare end-March 1991: short-term debt alone (by original maturity) was 146.5% of reserves, so India could not have repaid even its short-term loans.
An expanded Greenspan–Guidotti measure adds the current account deficit to short-term debt, because a deficit must also be financed over the year.
3. Reserves to total external debt
This is the ratio the RBI calls external debt cover. It was 90.3% at end-March 2026 (Annual Report). In October 2026 the Governor put it at 94.4%, which equals reserves of US$734.6 billion (2 October) divided by debt of US$778.2 billion (end-June).
4. Other ratios
- Volatile capital flows to reserves. This counts cumulative portfolio inflows plus short-term debt. It was 69.1% at end-December 2025, compared with 146.6% at end-March 1991.
- Reserves to broad money (M2). This measures the risk of residents moving their deposits abroad, and matters most for countries with very open capital accounts.
5. The IMF's ARA metric
After the 2008 crisis, the IMF built a composite measure, the Assessing Reserve Adequacy (ARA) EM metric. It adds up four possible drains on reserves, each given a weight based on how much emerging markets actually lost in past episodes of pressure (the 10th percentile of observed outflows):
| Component | Risk it captures | Weight, floating regime | Weight, fixed regime |
|---|---|---|---|
| Short-term debt | Lenders refusing to roll over | 30% | 30% |
| Other liabilities (portfolio equity, medium/long-term debt) | Foreign investors selling out | 15% | 20% |
| Broad money (M2) | Residents moving money abroad | 5% | 10% |
| Exports | Loss of export income | 5% | 10% |
Reserves of 100–150% of the metric are considered broadly adequate for precautionary purposes (IMF Guidance Note, 2016). The metric leaves out imports and the current account deficit, because a deficit financed by debt or portfolio inflows already shows up in the short-term debt and other liabilities terms.
Worked example (hypothetical numbers). Take an emerging economy with a floating rate and short-term debt of US$200 billion, other liabilities of US$800 billion, M2 of US$3,000 billion and exports of US$800 billion:
- 30% × 200 = 60
- 15% × 800 = 120
- 5% × 3,000 = 150
- 5% × 800 = 40
- Metric = 60 + 120 + 150 + 40 = US$370 billion
Reserves of US$500 billion would be 500 ÷ 370 = 135% of the metric, inside the 100–150% band.
Gold: buying, bringing it home, and a rising share
How much gold
The RBI held 880.52 tonnes of gold at end-March 2026, against 760.42 tonnes at end-March 2022. It bought heavily in 2022–24 and then largely stopped: holdings were 879.58 tonnes at end-March 2025 (Annual Report), a rise of only 0.94 tonnes in 2025-26. In June 2026 the RBI said the stock was still 880.52 tonnes.
In the RBI's own accounts, the gold is split between two departments:
- 312.32 tonnes are held in India by the Issue Department as backing for notes issued;
- 568.20 tonnes are assets of the Banking Department.
Bringing gold home
For decades much of India's gold sat in vaults at the Bank of England and the Bank for International Settlements (BIS). In 2024–26 the RBI moved a large part of it to India. The half-yearly reports show the change:
| End of | Held in India (t) | With BoE and BIS (t) | Gold deposits (t) | Total (t) |
|---|---|---|---|---|
| March 2023 | 301.10 | 437.22 | 56.32 | 794.64 |
| March 2024 | 408.31 | 387.26 | 26.53 | 822.10 |
| September 2024 | 510.46 | 324.01 | 20.26 | 854.73 |
| March 2025 | 511.99 | 348.62 | 18.98 | 879.59 |
| September 2025 | 575.82 | 290.37 | 13.99 | 880.18 |
| March 2026 | 680.05 | 197.67 | 2.80 | 880.52 |
Between end-March and end-September 2024, gold held in India rose by about 102 tonnes. This matches media reports, citing official sources, that the RBI moved over 100 tonnes from the UK in 2024 "for logistical reasons and for diversified storage". More followed: by end-March 2026, 77% of the RBI's gold (680.05 ÷ 880.52) was in India, against 38% at end-March 2023.
The reasons usually given: diversifying where the gold is stored, saving custody fees, having the gold under domestic control, and the lesson of 2022, when Western sanctions froze Russia's reserves held abroad. The RBI's official explanation was logistics and diversified storage.
The rising share
Gold's share of reserves (in US dollar value) more than doubled in four years:
| End of | Gold share |
|---|---|
| March 2022 | 7.01% |
| March 2023 | 7.81% |
| March 2024 | 8.15% |
| September 2024 | 9.32% |
| March 2025 | 11.70% |
| September 2025 | 13.92% |
| March 2026 | 16.70% |
| 16 October 2026 (WSS) | 14.67% |
Since early 2025 the tonnage has barely changed, so the rise since then is mostly the gold price, not buying. The October 2026 dip reflects both lower gold prices and the jump in FCA from swap inflows.
How the reserves are invested
Safety, liquidity, return
The RBI's stated objectives are safety and liquidity, with return optimisation kept in view within that framework. The order matters: reserves exist to be used in a crisis, so they must be safe and quickly saleable before they can earn anything.
The legal framework
The RBI Act, 1934 sets the rules, mainly in Sections 17(6A), 17(12), 17(12A), 17(13) and 33(6). In brief, the RBI may hold:
- deposits with other central banks and the BIS;
- deposits with commercial banks overseas;
- debt of sovereigns, or debt guaranteed by sovereigns, with residual maturity of up to 10 years;
- other instruments and institutions approved by the RBI's Central Board under the Act;
- certain types of derivatives.
The broad strategy, including the currency mix and investment policy, is decided in consultation with the Government of India.
Where the FCA was at end-March 2026
| Deployment | US$ million | Share of FCA |
|---|---|---|
| Securities | 465,612 | 84.31% |
| Deposits with other central banks and the BIS | 46,829 | 8.48% |
| Deposits with commercial banks overseas | 39,841 | 7.21% |
| Total FCA | 552,283 | 100% |
A small part of the reserves is run by external asset managers. The RBI may invest up to US$5 billion in bonds of IIFC (UK); it held US$400 million of these at end-March 2026.
Managing the risks
- Credit risk: only highly rated sovereigns, central banks and supranational bodies, with limits for each counterparty.
- Market risk: measured with Value-at-Risk, Conditional VaR and stress tests. Interest-rate risk is controlled through a benchmark duration.
- Liquidity risk: almost everything except fixed deposits and supranational bonds can be turned into cash at short notice.
- Operational risk: front and back offices are kept separate, with concurrent audit. Trades settle over SWIFT, now on ISO 20022.
Valuation gains and losses on FCA and gold go to the Currency and Gold Revaluation Account (CGRA), and those on foreign securities go to the Investment Revaluation Account (IRA). These are buffers on the RBI balance sheet. They are not profit and are not transferred to the government. The rate of earnings on FCA was 6.4% in 2025-26, against 5.3% in 2024-25 (Annual Report).
The half-yearly report
The RBI publishes a Half-Yearly Report on Management of Foreign Exchange Reserves, with data as at end-March and end-September. The first covered 30 September 2003 and was released on 3 February 2004. The 46th report (as at end-March 2026) came out on 30 April 2026. Each report covers changes in reserves, sources of accretion, the forward book, external liabilities, adequacy, gold, the investment pattern, and the legal and risk framework.
India in the world
At the September 2026 peak India was described as the fourth-largest holder of reserves, after China, Japan and Switzerland, having overtaken Russia. After the October fall, India's US$721.0 billion is just below Russia's US$731.8 billion (end-September), so India is about fifth:
| Rank | Country | Reserves (US$ bn, latest) |
|---|---|---|
| 1 | China | 3,400.3 (Sep 2026) |
| 2 | Japan | 1,178.4 (Sep 2026) |
| 3 | Switzerland | about 934 (CHF 770.5 bn, Sep 2026) |
| 4 | Russia | 731.8 (Sep 2026) |
| 5 | India | 721.0 (16 Oct 2026) |
| 6 | Taiwan | 600.8 (Sep 2026) |
Rankings depend on the date and on definitions (some include gold, some do not), so treat any rank as approximate and quote the date.
Then and now: 1991
| 1991 | 2026 | |
|---|---|---|
| Reserves | US$5.8 bn (end-March 1991) | US$721.0 bn (16 Oct 2026) |
| Import cover | about 3 weeks (end-December 1990) | about 11 months |
| Short-term debt ÷ reserves | 146.5% (end-March 1991, original maturity) | 23.0% (end-June 2026) |
| Volatile flows ÷ reserves | 146.6% | 69.1% (end-December 2025) |
| Gold | 46.91 tonnes pledged with the Bank of England and the Bank of Japan for a US$405 million loan (July 1991) | 880.52 tonnes, 77% held in India |
In 1991 the problem was liquidity: India could not pay its import bills or roll over short-term debt, and had to pledge gold. Today the problem is the cost and composition of a very large stock. After the crisis, the Tarapore Committee on Capital Account Convertibility (1997) added money-based and debt-based measures to the old import-cover test.
The costs of holding reserves
Reserves are insurance, and insurance has a premium.
- Opportunity cost (negative carry). Reserves are invested in safe, low-yield foreign bonds. The same money could pay off costlier foreign debt or fund investment at home. The cost is the gap between what India pays on its external liabilities and what the reserves earn.
- Sterilisation cost. When the RBI buys dollars, it creates rupees. To stop that money adding to inflation, it absorbs the rupees through the SDF, VRRR auctions or open market sales, and pays interest on them. Hypothetical example: absorbing ₹1 lakh crore for a year at the SDF rate of 5.25% costs ₹1,00,000 crore × 0.0525 = ₹5,250 crore. In 2026 the swap inflows flooded banks with rupees; the RBI's October statement noted that bulk deposit rates fell because of the surge in liquidity from FCNR(B) money.
- Valuation risk. A stronger dollar or a fall in gold cuts the dollar value of reserves. In April–June 2026 this cost US$14.4 billion. On the RBI's balance sheet, rupee appreciation causes losses, which the CGRA absorbs.
- Cost of borrowed reserves. Reserves built from swaps carry forward obligations, and the RBI bore the full hedging cost of the 2026 FCNR(B) deposits. Gross reserves rise, but so do liabilities.
- Moral hazard. Large reserves can make firms assume the central bank will always defend the rupee, so they leave their foreign-currency borrowing unhedged.
The benefit side is real too. Reserves lower borrowing costs, deter speculative attacks, and allowed the RBI to slow the rupee's fall in 2026 without a crisis.
Common exam traps
SDR vs RTP. Both relate to the IMF, but they are different. SDRs are an IMF reserve asset allocated to members. The reserve tranche is the part of India's quota it can draw without conditions. Both count as reserves.
Fall in reserves ≠ dollars sold. A weekly fall includes valuation changes in gold and non-dollar currencies. In the week to 16 October 2026, FCA fell by US$5.8 billion while gold rose by US$0.7 billion.
Original vs residual maturity. Short-term debt was 23.0% of reserves by original maturity but 50.5% by residual maturity. Greenspan–Guidotti uses residual maturity.
Gold tonnes vs gold share. The gold share rose from 11.70% to 16.70% between March 2025 and March 2026, while the tonnage rose by only about one tonne. The price did the work.
"Gold was sold." It was not. In June 2026 the RBI denied reports of gold sales; the stock was unchanged at 880.52 tonnes.
Record reserves ≠ trade surplus. The September 2026 record came mostly from FCNR(B) swaps, which the RBI must reverse when they mature.
Key facts at a glance
| Reserves, 16 October 2026 | US$721.0 bn (₹68.46 lakh crore) |
| FCA / gold / SDRs / RTP | US$591.8 bn / 105.8 bn / 18.6 bn / 4.8 bn |
| All-time high | US$785.7 bn, week ended 4 September 2026 |
| Largest weekly rise | US$44.9 bn, week ended 4 September 2026 |
| Low of 2026 | US$666.9 bn, 26 June 2026 |
| End-March 2026 | US$691.1 bn |
| Import cover | About 11 months of merchandise imports (October 2026) |
| Short-term debt ÷ reserves | 23.0% original maturity; 50.5% residual maturity (end-June 2026) |
| External debt | US$778.2 bn, 20.8% of GDP (end-June 2026) |
| External debt cover | 94.4% (Governor, 7 October 2026) |
| Gold holdings | 880.52 tonnes, of which 680.05 t in India (end-March 2026) |
| Gold share | 16.70% (end-March 2026); 14.67% (16 October 2026) |
| FCA deployment | Securities 84.31%, central banks and BIS 8.48%, banks overseas 7.21% |
| Objectives | Safety and liquidity, then return |
| Legal basis | RBI Act Sections 17(6A), 17(12), 17(12A), 17(13), 33(6) |
| Swap window inflows | US$143.6 bn by 18 September 2026 (FCNR(B) US$133.0 bn) |
| Net forward payable | US$103.1 bn (end-March 2026) |
| IMF ARA adequate range | 100–150% of the metric |
| 1991 | US$5.8 bn; about 3 weeks of import cover; 46.91 t of gold pledged |
Exam corner: what to remember
- Four components: FCA (about 82%), gold (about 15%), SDRs, and the reserve tranche position at the IMF. All are reported in US dollars, every Friday in the WSS.
- Record US$785.7 bn on 4 September 2026, built on the FCNR(B) swap window (opened 8 June 2026); then six weekly falls to US$721.0 bn on 16 October as the RBI sold dollars and gold prices fell.
- Adequacy: import cover about 11 months (benchmark 3); Greenspan–Guidotti = reserves at least equal to short-term debt by residual maturity (India: 50.5% of reserves); IMF ARA adequate at 100–150%.
- ARA weights (floating): short-term debt 30%, other liabilities 15%, broad money 5%, exports 5%.
- Gold: 880.52 t; 77% in India by March 2026 after repatriation from the Bank of England; share up from 7.01% (March 2022) to 16.70% (March 2026).
- Investment priorities: safety, liquidity, return, in that order. Most FCA is in securities. Law: Sections 17 and 33(6) of the RBI Act.
- The Half-Yearly Report on Management of Foreign Exchange Reserves comes out for end-March and end-September; the 46th was released on 30 April 2026.
- 1991: US$5.8 bn; import cover about 3 weeks; short-term debt 146.5% of reserves; 46.91 t of gold pledged.
- Costs: negative carry, sterilisation, valuation risk, swap and hedging costs, moral hazard.
For exam-specific syllabus and pattern details, see our pages for RBI Grade B, SBI PO and IBPS PO.
Test yourself
Which of these is NOT a component of India's foreign exchange reserves as reported by the RBI?
Show answer
Answer: (d) NRI deposits are liabilities of Indian banks. The four components are FCA, gold, SDRs and the reserve tranche position at the IMF.
India's foreign exchange reserves reached their all-time high of US$785.7 billion in the week ended:
Show answer
Answer: (c) The record came after a US$44.9 billion weekly rise driven by the FCNR(B) swap window.
The Greenspan–Guidotti rule says a country's reserves should at least equal:
Show answer
Answer: (b) The rule calls for 100% cover of short-term external debt by residual maturity.
Under the IMF's ARA EM metric, reserves are considered broadly adequate when they are:
Show answer
Answer: (b) The IMF's 2016 guidance note treats 100–150% of the composite metric as broadly adequate for precautionary purposes.
Reserves are US$721.0 billion, of which gold is US$105.8 billion. Gold's share of reserves is closest to:
Show answer
Answer: (c) 105.8 ÷ 721.0 = 0.1467, or about 14.7%; 16.7% was the end-March 2026 share.
Short-term external debt by residual maturity is 50.5% of reserves. How many times do reserves cover this debt?
Show answer
Answer: (c) 1 ÷ 0.505 = 1.98, so reserves cover the debt about twice.
According to the RBI's half-yearly report, how much gold did the RBI hold at end-March 2026, and how much of it was in India?
Show answer
Answer: (c) 680.05 of 880.52 tonnes, about 77%, were held in India; the rest was with the Bank of England and the BIS or in gold deposits.
In October 2026, to reduce pressure on the rupee, the RBI opened a special window to sell dollars directly to:
Show answer
Answer: (b) From 12 October 2026 the RBI met the entire daily dollar needs of IOC, HPCL and BPCL through designated banks.
The guiding objectives of reserve management in India, in order of priority, are:
Show answer
Answer: (c) The RBI states that safety and liquidity are the twin objectives, and return optimisation is pursued within that framework.
At end-December 1990, India's reserves covered roughly how many weeks of imports?
Show answer
Answer: (a) The RBI's 2004 report on reserves notes that import cover fell to a low of three weeks at end-December 1990.
Further reading
- RBI, Half-Yearly Report on Management of Foreign Exchange Reserves, October 2025–March 2026: the latest official account of reserve movements, gold, investment pattern, adequacy and risk management. Read Part II for the legal and risk framework.
- RBI, Report on Foreign Exchange Reserves (2004): how reserves grew after 1991, the Rangarajan and Tarapore approaches to adequacy, and the 1991 ratios.
- IMF, Guidance Note on the Assessment of Reserve Adequacy and Related Considerations (2016): the source for the ARA EM metric weights, the 100–150% range and the traditional metrics, including Greenspan–Guidotti.
- RBI Annual Report 2025-26, Chapter XII: The Reserve Bank's Accounts: gold held by the Issue and Banking Departments, the CGRA, and the rate of earnings on FCA.
- RBI, India's External Debt as at the end of June 2026: the latest debt and short-term debt ratios you need for Greenspan–Guidotti.
- RBI, Sources of Variation in India's Foreign Exchange Reserves during April–June 2026: a short, clear example of separating BoP flows from valuation effects.
Sources
- RBI, Weekly Statistical Supplement, 23 October 2026: reserves of US$721,016 million on 16 October 2026; FCA 591,847, gold 105,800, SDRs 18,578, RTP 4,791; weekly fall of 5,011; FCA exclusions (accessed 24 October 2026)
- RBI, Weekly Statistical Supplement, 11 September 2026: record US$785,706 million on 4 September 2026, weekly rise of 44,903; FCA 648,168, gold 113,816, SDRs 18,806, RTP 4,916 (accessed 24 October 2026)
- RBI, Weekly Statistical Supplements, January–October 2026: weekly totals used in the 2026 chart, from 2 January 2026 (Id=28174) to 16 October 2026 (Id=28789), including 26 June 2026 (Id=28549) and 27 February 2026 (Id=28294) (accessed 24 October 2026)
- RBI, Half-Yearly Report on Management of Foreign Exchange Reserves, October 2025–March 2026: end-March 2026 reserves, net forward payable US$103.06 bn, import cover 10.8 months, short-term debt ratios, gold 880.52 t (680.05 t in India), gold share 16.70%, FCA deployment, legal framework, objectives, risk management (accessed 24 October 2026)
- RBI, Half-Yearly Report, April–September 2025: gold 880.18 t (575.82 t in India), gold share 13.92% (11.70% at end-March 2025), net forward payable US$59.40 bn, import cover 11.0 months at end-March 2025 (accessed 24 October 2026)
- RBI, Half-Yearly Report, October 2024–March 2025: gold 879.59 t (511.99 t in India), gold share 9.32% at end-September 2024, import cover 11.8 months at end-September 2024 (accessed 24 October 2026)
- RBI, Half-Yearly Report, April–September 2024: gold 854.73 t (510.46 t in India), import cover 11.3 months at end-March 2024 (accessed 24 October 2026)
- RBI, Half-Yearly Report, October 2023–March 2024: gold 822.10 t (408.31 t in India), gold share 8.15%, import cover 10.4 months at end-September 2023 (accessed 24 October 2026)
- RBI, Half-Yearly Report, April–September 2023: import cover 9.6 months at end-March 2023; gold share 7.81% at end-March 2023 (accessed 24 October 2026)
- RBI, Half-Yearly Report, October 2022–March 2023: gold 794.64 t (301.10 t in India); import cover 8.9 months at end-September 2022 (accessed 24 October 2026)
- RBI, Half-Yearly Report, April–September 2022: import cover 11.8 months at end-March 2022 (accessed 24 October 2026)
- RBI, Half-Yearly Report, October 2021–March 2022: gold 760.42 t; gold share 7.01%; import cover 14.6 months at end-September 2021 (accessed 24 October 2026)
- RBI, Governor's Statement, 7 October 2026: import cover about 11 months, external debt cover 94.4%, reserves US$734.6 bn on 2 October; bulk deposit rates and FCNR(B) liquidity (accessed 24 October 2026)
- RBI, Governor's Statement, 5 June 2026: concessional swap for PSU ECBs and full hedging cost for 3–5 year FCNR(B) deposits; reserves US$682.3 bn on 29 May (accessed 24 October 2026)
- RBI press release, 20 July 2026: swap facility announced 5 June, operational 8 June 2026; inflows of US$20.7 bn by 17 July (accessed 24 October 2026)
- RBI press release, 14 August 2026: inflows of US$56.8 bn by 13 August; FCNR(B) window limited to deposits raised by 31 August (accessed 24 October 2026)
- RBI press release, 21 September 2026: inflows of US$143,596 million by 18 September (FCNR(B) 132,980; OFCBs 5,320; ECBs 5,296) (accessed 24 October 2026)
- RBI press release, 10 October 2026: regulatory measures for the forex market: rebooking curbs, US$5 million threshold, Foreign Exchange Risk Reserve of 20% (accessed 24 October 2026)
- RBI press release, 10 October 2026: special window for oil marketing companies: dollar sales to IOC, HPCL and BPCL from 12 October 2026 (accessed 24 October 2026)
- RBI press release, 3 June 2026: clarification on gold holdings: gold stock unchanged at 880.52 tonnes; reports of gold sales incorrect (accessed 24 October 2026)
- RBI, India's External Debt as at the end of June 2026: debt of US$778.2 bn, 20.8% of GDP; short-term debt 23.0% (original) and 50.5% (residual) of reserves (accessed 24 October 2026)
- RBI, India's External Debt as at the end of March 2026: debt of US$762.8 bn; short-term debt 21.6% (original) and 47.3% (residual) of reserves (accessed 24 October 2026)
- RBI, Sources of Variation in Foreign Exchange Reserves, April–June 2026: fall of US$22.5 bn, valuation loss US$14.4 bn, portfolio outflow US$9.6 bn (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapter XII: gold 879.58 t (March 2025) to 880.52 t (March 2026); Issue Department 312.32 t, Banking Department 568.20 t; CGRA; rate of earnings on FCA 6.4% (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapters I and II: import cover about 11 months and external debt cover 90.3% at end-March 2026; goods-and-services import cover around nine months (Chapter II) (accessed 24 October 2026)
- RBI, Report on Foreign Exchange Reserves (2004): US$5.8 bn at end-March 1991; import cover of 3 weeks at end-December 1990; short-term debt 146.5% and volatile flows 146.6% of reserves in March 1991; Rangarajan committee and Tarapore committee on adequacy (accessed 24 October 2026)
- IMF, Guidance Note on the Assessment of Reserve Adequacy (2016): ARA EM metric components and weights, 100–150% range, Greenspan–Guidotti as the most widely used standard (accessed 24 October 2026)
- CNBC, 16 October 2026: rupee recovery from 96.79 to about 95; Nomura estimate of a US$51 bn fall in reserves from dollar sales and US$200 bn of forward commitments; oil prices and the Iran war (accessed 24 October 2026)
- Millennium Post, 23 October 2026: experts citing FCNR(B) deployment and dollar sales as reasons for the fall (accessed 24 October 2026)
- The Pamphlet, September 2026: India fourth after China, Japan and Switzerland at the September peak, ahead of Russia (accessed 24 October 2026)
- Trading Economics, foreign exchange reserves by country: China US$3,400.3 bn, Japan US$1,178.4 bn, Russia US$731.8 bn, Taiwan US$600.8 bn, Switzerland CHF 770.5 bn (September 2026); USD/CHF 0.825 on 23 October 2026 used for conversion (accessed 24 October 2026)
- The Quint fact-check, June 2024: over 100 tonnes moved from the UK in 2024 for "logistical reasons and for diversified storage"; 46.91 t pledged in July 1991 for a US$405 million loan (accessed 24 October 2026)
- IMF, India country page: India's SDR holdings and quota (accessed 24 October 2026)