The Reserve Bank of India (RBI) net purchased USD 43.264 billion in the spot foreign exchange market in August 2026, driven largely by inflows under its concessional swap facility for Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, according to the central bank's monthly bulletin released on Friday.
The purchases marked the third consecutive month of net dollar buying by the RBI, following net purchases of USD 18.652 billion in July and USD 561 million in June. In May, the central bank had recorded net dollar sales of USD 6.104 billion.
On a gross basis, the RBI purchased USD 74.472 billion and sold USD 31.208 billion in August, resulting in net purchases of USD 43.264 billion.
๐๐๐ก๐ฅ(๐) ๐ถ๐ป๐ณ๐น๐ผ๐๐ ๐ฑ๐ฟ๐ถ๐๐ฒ ๐ฝ๐๐ฟ๐ฐ๐ต๐ฎ๐๐ฒ๐
The RBI bulletin attributed the sharp increase in foreign currency inflows to its special USD-INR foreign exchange swap facility, which encouraged higher FCNR(B) deposits.
Net inflows under non-resident deposit schemes surged in August, primarily supported by increased deposits under the FCNR(B) category.
Consequently, the share of FCNR(B) deposits in total outstanding non-resident deposits rose sharply at the end of August 2026.
The concessional swap facility helped attract foreign currency deposits into the banking system, contributing to increased dollar availability in the domestic foreign exchange market.
The substantial inflows also supported the Indian rupee during the early part of September.
๐ฅ๐๐ฝ๐ฒ๐ฒ ๐ณ๐ฎ๐ฐ๐ฒ๐ ๐ฟ๐ฒ๐ป๐ฒ๐๐ฒ๐ฑ ๐ฝ๐ฟ๐ฒ๐๐๐๐ฟ๐ฒ
According to the RBI, the rupee initially benefited from robust FCNR(B) deposit inflows in early September, but those gains were subsequently reversed as international crude oil prices increased.
The domestic currency exhibited a depreciating bias from late September, reflecting the combined impact of a stronger US dollar and rising crude prices.
However, the rupee recovered in mid-October, supported by RBI measures aimed at curbing speculative dollar demand and a softer US currency.
The central bank observed that currency movements remained sensitive to developments in global financial markets, energy prices and international capital flows.
๐ฅ๐๐ ๐ณ๐น๐ฎ๐ด๐ ๐ฒ๐ ๐๐ฒ๐ฟ๐ป๐ฎ๐น ๐ฟ๐ถ๐๐ธ๐
Looking ahead, the RBI bulletin identified several factors that could exert pressure on the Indian currency, including a strong US dollar, elevated import costs, volatile capital inflows and growing uncertainty surrounding international trade policies.
It warned that any escalation in geopolitical tensions or unexpectedly aggressive monetary tightening by major central banks could further weaken the rupee.
At the same time, the bulletin highlighted potential sources of support for the domestic currency, including the resilience of India's services exports, stability in bilateral trade arrangements and sustained foreign capital inflows.
These factors could help offset some of the external pressures affecting the rupee.
๐ฅ๐๐ฝ๐ฒ๐ฒ ๐ฐ๐น๐ผ๐๐ฒ๐ ๐ฎ๐ ๐ต๐ฐ.๐ต๐ฏ
Meanwhile, the rupee depreciated for the second consecutive session on Friday, settling 12 paise lower at 94.93 against the US dollar.
The decline was attributed to rising international crude oil prices and sluggish domestic equity markets.
Ongoing tensions between Saudi Arabia and the Houthis also contributed to uncertainty in global oil markets, raising concerns about sustained pressure on energy prices.
As India remains heavily dependent on imported crude oil, elevated energy costs can increase demand for foreign currency and add pressure on the rupee.
The RBI's latest data highlighted the scale of dollar inflows generated by the FCNR(B) swap facility, even as external developments continued to influence the domestic currency's performance.