The Reserve Bank of India (RBI) net purchased a record $43.26 billion in August, more than double the $18.65 billion net purchase in July, according to the central bank’s monthly bulletin.
The surge in RBI purchases occurred as dollars mobilised under the central bank’s concessional swap facility for FCNR(B) deposits, external commercial borrowings and overseas foreign currency borrowings were routed back to the RBI through the swap window. The RBI had brought forward the closure of the facility to August 31 from September 30 after banks had mobilised $52.3 billion by August 14.
The central bank bought $74.47 billion during the month, while it sold $31.21 billion.
The RBI had been a net dollar seller in 10 of the 17 months to August. It sold dollars consistently from August 2025 to December 2025, before sales paused in January 2026 and February 2026 and resumed in March 2026.
The trend has reversed in FY27. After net selling dollars in April and May, the RBI turned a net buyer in June and stepped up purchases sharply in July and August. Cumulative net dollar buying in FY27 so far rose to $47.43 billion by August-end, from $4.17 billion at July-end, nearly offsetting the $53.13 billion of net selling in the whole of FY26.
The outstanding net short dollar position in the forward market surged to a record $200.06 billion by August-end from $136.77 billion at July-end, a rise of about $63 billion in a month.
The central bank’s outstanding net short dollar position in the forward market surged to a record $200.06 billion by August-end from $136.77 billion at July-end, data released by the central bank on Monday showed.
Short positions with a maturity of less than one year rose to $55.15 billion at the end of August from $47.66 billion in July, while positions with a maturity of more than one year nearly doubled to $176.57 billion from $91.54 billion.
At the same time, the RBI’s long dollar positions increased to $31.66 billion by August-end from $2.43 billion at July-end. All of these positions mature within one month. Consequently, after adjusting for long positions, the RBI’s net short position in contracts maturing within one year fell to around $23.5 billion in August from $45.2 billion in July.
Further, as of September, the real effective exchange rate (REER) of the Indian rupee stood at 89.35, against 88.72 in August.
The REER adjusts the nominal effective exchange rate (NEER) to account for inflation differentials between India and its major trading partners. A REER value above 100 indicates an appreciation of the rupee relative to the base year, potentially making Indian exports less competitive in global markets.