RBI net dollar purchases hit record in August per bulletin

The Reserve Bank of India net purchased a record $43.26 billion in August 2026, more than double the $18.65 billion net purchase recorded in July 2026, according to the central bank’s monthly bulletin. The surge in purchases occurred as dollars mobilized under the central bank’s concessional swap facility for Foreign Currency Non-Resident Bank deposits, external commercial borrowings, and overseas foreign currency borrowings were routed back to the central bank through the swap window.

Surge in Dollar Purchases and Concessional Swap Facility Closure

The central bank bought $74.47 billion during August 2026 while selling $31.21 billion, yielding the record net purchase figure of $43.26 billion. The sharp increase in spot-market activity coincided with the return of foreign currency associated with the concessional swap scheme. The Reserve Bank of India had advanced the closure date of the swap facility to August 31, 2026, from September 30, 2026, after participating banks mobilized $52.3 billion under the program by August 14, 2026.

Reversal of the Foreign Exchange Strategy and Financial Year Comparisons

The August figures underscore a stark shift in the central bank’s currency management after a prolonged period of dollar sales. The Reserve Bank of India had acted as a net dollar seller in 10 of the 17 months leading up to August 2026, maintaining continuous sales from August 2025 through December 2025. After pausing those sales in January 2026 and February 2026, net selling resumed in March 2026. The trajectory flipped in the 2027 financial year, with net sales in April and May 2026 giving way to net purchases in June, July, and August. Cumulative net dollar buying for the 2027 financial year reached $47.43 billion by the end of August 2026, nearly offsetting the $53.13 billion of net selling recorded across the entire 2026 financial year.

Expansion of Forward Market Book and Short Positions

Data released by the central bank on Monday showed that the outstanding net short dollar position in the forward market surged to a record $200.06 billion at the end of August 2026, up from $136.77 billion at the end of July 2026. Short positions maturing in less than one year rose to $55.15 billion in August 2026 from $47.66 billion in July 2026, while positions with maturities exceeding one year nearly doubled to $176.57 billion from $91.54 billion. Simultaneously, long dollar positions maturing within one month expanded to $31.66 billion by August-end from $2.43 billion at July-end. Accounting for these long positions, the central bank’s net short position in contracts maturing within one year dropped to roughly $23.5 billion in August 2026 from $45.2 billion in July 2026.

Rupee Competitiveness and Economic Indicators

In broader currency metrics, the real effective exchange rate of the Indian rupee stood at 89.35 in September 2026, compared to 88.72 in August 2026. The real effective exchange rate adjusts the nominal effective exchange rate to reflect inflation differentials between India and its major trading partners. A reading above 100 signifies rupee appreciation against a base year, which can weigh on the global competitiveness of Indian exports.