Two forces produced the record. The first is the RBI's concessional swap window, opened in June 2026 to pull foreign currency into the system; it had brought in roughly $72.8 billion by 21 August and is expected to deliver $90-100 billion by the time it closes on 31 August. The second is revaluation. Of the $9.482 billion rise in foreign currency assets during the reported week, only about $6.1 billion is attributed to RBI purchases of dollars; the rest came from the changing dollar value of non-dollar holdings such as the euro, pound sterling and yen. Gold behaved the same way: the $2.801 billion increase in gold reserves followed a 5.18 per cent rise in the international gold price to $4,603 an ounce, not fresh buying. Reserves can therefore move sharply in either direction without the central bank transacting at all - a point examiners like to test.

Reserves are India's buffer against external shocks. More than 11 months of import cover means the country could pay for essential imports for close to a year even if export earnings and capital inflows stopped, which is comfortably above the traditional benchmark of three months. Large reserves also give the RBI room to smooth rupee volatility without triggering a confidence crisis, and they support India's sovereign credit standing. The episode illustrates the trade-off: defending the rupee during the West Asia crisis cost the reserves more than $60 billion between February and June, and rebuilding the buffer required an unusual policy instrument in the shape of the swap window. The recovery has also helped avert what would have been an unprecedented third straight year of deficit on India's broadest measure of cross-border money flows.