India, in Infographics: Macro and Markets

$127 Billion In Twelve Weeks. A Sixth Of India’s Reserves. Diaspora Ups The Ante.

FCNR(B) deposits are dollars non-resident Indians park in Indian banks. On 8 June 2026, three months after a war in West Asia knocked $46.88 billion off India’s reserves, the Reserve Bank reopened a swap window to pull them in — and drew $127.22 billion by 31 August, 17.5% of the pre-war pile.

Scale is measured against India’s reserves on 27 February 2026 — the last weekly figure before the war of the 28th — because the window’s own dollars are still settling into the reserve total, and measuring against today’s number would count the same money twice.

India’s forex reservesFCNR(B) depositsCorporate & external borrowingsThe 2013 window is drawn to the same dollar scale

Share of the pre-war pile

17.5%

$127.22bn against the $728.49bn India held on 27 February 2026

Bigger than 2013

4.9×

Rajan’s taper-tantrum window drew $26bn in FCNR(B); this drew nearly five times as much

Fell before the window opened

$47bn

Reserves slid to a one-year low of $682bn defending the rupee; the window more than refilled it

And it must be repaid

3–5 yrs

Borrowed money, maturing from 2029, with the FX risk now on RBI’s books

Did the Reserve Bank’s gamble work?

On the immediate test, yes. The rupee held — bruised but not broken at 95.69 to the dollar on 21 August, through a war, a record $32 billion of foreign equity outflows and an oil shock. Reserves are back to a record $729 billion, and the window did it without RBI having to burn its own dollars in the open market to get there. Analysts had expected perhaps $20 billion from the FCNR(B) leg; it drew more than six times that.

But is it money India has earned?

No — it is money India has borrowed. Every dollar of the $127.22 billion is a deposit that has to be repaid, at a three-to-five-year maturity, with the bulk at the five-year end — so the wall falls between 2029 and 2031. And unlike 2013, when banks carried a roughly 3.5% swap cost, this time the Reserve Bank bears the full exchange-rate risk on the swap — its net forward-dollar book was already past $103 billion at the end of June. The record reserve total is also barely above where it stood before the war, because much of the window’s dollars replaced what RBI spent defending the rupee rather than piling on top of it. The last such window, in 2013, came due in 2016 and was managed cleanly — but this one is nearly five times the size. For perspective, the reserve pile has more than doubled since 2014 — from $320 billion to a $728 billion pre-war peak, up 2.3× — so a window repaid over five years sits against a buffer built to absorb it.

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How the swap window actually works

A deposit, then a swap

A non-resident Indian moves dollars into an FCNR(B) account — a foreign-currency deposit at an Indian bank, held in dollars, on which the bank pays interest. The bank then swaps those dollars with the Reserve Bank for rupees it can lend at home. The dollars land in the country’s reserves; the deposit sits as a liability the bank owes back in three to five years. The window is simply RBI offering that swap on concessional terms for a fixed stretch — here, 8 June to 31 August 2026 for the deposit leg — to make raising the dollars worth the banks’ while.

Who carries the currency risk — and why that changed

A dollar deposit repaid in dollars carries exchange-rate risk: if the rupee falls, whoever owes the dollars owes more rupees. In 2013 the banks bore a slice of that, paying a swap cost of about 3.5%. In 2026 the Reserve Bank has taken the whole risk onto its own book, which is what let banks offer depositors a rich enough rate to pull in $127.22 billion — but it also means the state, not the banks, is now short the dollars if the rupee keeps sliding.

Why it counts as reserves, but not as wealth

The swapped dollars genuinely raise India’s headline reserve number, and a bigger buffer is a real defence for the currency. But reserves built this way are borrowed, not earned through exports or investment: they arrive with a repayment date attached and a matching forward liability on the central bank’s books. A reader who counts them as national savings has misread the line; a reader who counts them as a three-to-five-year loan taken to steady the rupee has read it right.

Won’t the interest become a burden?

The deposits pay a rich rate — around 6.5% — but the money is put to work on both sides, so the interest is a cost the system earns against, not dead weight.

Banks lend it at home. The dollars are swapped to the Reserve Bank for rupees, which banks deploy in domestic credit — where they earn more than the deposit costs them.
The Reserve Bank invests the reserves. They are not idle cash: over 80% of the foreign-currency assets sit in overseas government securities — US Treasuries above all — with the rest in deposits at other central banks and the BIS, alongside gold and SDR holdings. All of it earns a yield.
A bigger buffer pays back indirectly. A deeper pile steadies the rupee and firms up India’s credit standing, trimming what the government and companies pay to borrow abroad.
It is a proven structure. The 2013 window was built the same way and unwound in 2016 without strain. The interest is a managed cost, set against these earnings — the real exposure is the exchange-rate risk the Reserve Bank now carries on the swap.

Why the Reserve Bank reached for it

A war, then a run on the rupee

On 28 February 2026 war broke out in West Asia and the Strait of Hormuz was closed, sending oil higher and the rupee lower. Foreign investors pulled a record $32 billion out of Indian equities over the year, and the currency weakened to 95.69 a dollar by late August. Defending it cost reserves: the pile fell $46.88 billion, from $728.49 billion on the eve of the war to a one-year low of $681.61 billion by the week of 5 June. Rather than keep selling into that pressure day after day, the Reserve Bank reopened the swap window it had last used in the 2013 taper tantrum — borrowing dollars from the diaspora to do the defending instead.

How this was built

The baseline is deliberately the pre-war print

Scale is measured against reserves of $728.49 billion on 27 February 2026, the last weekly figure before the war. That is the honest denominator: the window’s $127 billion is still settling into the reserve total, so dividing it by today’s reserve number would put the same dollars on both sides of the ratio.

The figures are RBI’s provisional totals

As of 31 August 2026: $127.22 billion FCNR(B) deposits, $5.26 billion overseas foreign-currency borrowings, $3.89 billion external commercial borrowings, for $136.37 billion in all. The deposit leg has closed; the two borrowing legs run to 31 December, so the total may still rise. RBI calls the figures provisional and subject to reconciliation.

The 2013 comparison

The taper-tantrum window RBI ran under Raghuram Rajan drew about $34 billion, of which roughly $26 billion was FCNR(B) — around 12% of India’s reserves at the time. Those are the widely-cited round figures; the 2013 reserve base is approximate and is used here only for that context, not for the headline ratio.

Sources: Reserve Bank of India weekly statistical supplement and swap-facility data; the FCNR(B), OFCB and ECB split as reported by the RBI on 2 September 2026; contemporaneous reporting on the window and the rupee; Outlook Business on the 2013 comparison and the mechanics. Reserve figures for 27 February and 21 August 2026 are RBI weekly releases. All 2026 window figures are provisional and subject to revision.