Overview
- RBI data for the week ended August 21 showed reserves jumped by $12.42 billion to $729.33 billion, driven mainly by higher foreign‑currency assets and a $2.8 billion rise in gold holdings.
- The central bank and government’s June package, including a special FCNR(B) deposit window, has drawn roughly $72–73 billion of inflows with about $65.4 billion mobilised into FCNR(B) deposits.
- Authorities have absorbed part of the inflows into the reserve stockpile and stepped up onshore and offshore interventions, with reports that the RBI at times spent large sums, including an instance cited at about $7 billion in a single day.
- Despite the stronger reserve buffer, the rupee stayed under pressure recently, trading around ₹95.3–95.6 per dollar as oil costs and a strong dollar continued to influence currency moves.
- Analysts warn the deposit‑led strategy is expensive because the RBI bears hedging and carry costs that some estimate at roughly $5.7 billion a year, and they say the flows could reverse if incentives or global conditions change so markets should watch oil prices, US policy signals and portfolio flows.