The sharp weekly jump of $14.17 billion is one of the highest in recent months, following a period where the RBI aggressively deployed its reserves to defend the rupee from slipping toward the 92 per USD mark.
The Anatomy of the Surge
The increase was driven by a massive rise in both foreign currency assets and gold valuations:
| Component | Value (as of Jan 16, 2026) | Weekly Change |
| Foreign Currency Assets (FCA) | $560.52 Billion | ▲ $9.65 Billion |
| Gold Reserves | $117.45 Billion | ▲ $4.62 Billion |
| Special Drawing Rights (SDR) | $18.70 Billion | ▼ $0.035 Billion |
| Reserve Position in IMF | $4.68 Billion | ▼ $0.073 Billion |
| Total Reserves | $701.36 Billion | ▲ $14.17 Billion |
Why the Reserves Swelled Despite Rupee Pressure
The surge presents a puzzle: why did reserves grow while the RBI was reportedly selling dollars to support the rupee? The answer lies in a mix of technical and strategic factors:
1. The $10-Billion USD/INR Swap
The RBI utilized a buy-sell swap where it purchased dollars from banks in exchange for rupees. This injected rupee liquidity into the banking system to keep domestic interest rates stable while simultaneously adding $10 billion to the forex kitty.
2. The “Gold Rush” Valuation
With global silver prices crossing $100 and gold nearing $5,000 per ounce in January 2026, the value of India’s gold holdings—which now exceed 880 tonnes—saw a natural appreciation of over $4.6 billion in a single week.
3. Valuation Gains (Non-USD Currencies)
The FCA component includes non-US currencies like the Euro, Pound Sterling, and Japanese Yen. As these currencies appreciated against the dollar during the reporting week, their value in dollar terms increased, adding to the total buffer.
The Rupee Paradox
Despite the $700 billion cushion, the Indian Rupee closed at a fresh low of 91.94 on Friday, January 23, 2026.
- FII Outflow: Foreign investors have pulled out over ₹36,000 crore from Indian equities in January alone.
- The “Shield” Strategy: Analysts suggest the RBI is no longer defending a specific level (like 90 or 91) but is using its $701 billion buffer to ensure the rupee’s decline is “orderly” rather than a chaotic crash.
Conclusion: A Stronger Fortress
India now holds the fourth-largest forex reserves in the world, trailing only China, Japan, and Switzerland. This $701 billion “fortress” provides India with over 11 months of import cover, ensuring that the country remains insulated from external debt shocks even as the global trade environment turns increasingly protectionist in 2026.
