India has overtaken Russia in fourth spot in the list of countries with the highest foreign exchange reserves after data released by the Reserve Bank of India (RBI) on Friday showed that its reserves increased by $45 billion in the week ended September 4 – the highest weekly gain ever.As per the latest data, India’s forex reserves stood at a new record $785.71 billion as on September 4, up $44.9 billion from August 28. Data from the Bank of Russia shows its international reserves stood at $753.5 billion as of September 4, having fallen $20.7 billion from $774.2 billion the previous week.China and Japan are at the top, with forex reserves of $3.85 trillion and $1.21 trillion, respectively. In third is Switzerland, with reserves of $1.09 trillion.The massive $44.9 billion gain in India’s forex reserves is over two-and-a-half times higher than the previous greatest weekly gain of $16.7 billion, recorded in the week ended August 27, 2021, and has been driven by the unexpectedly high inflow of Foreign Currency Non-Resident (Bank) deposits under the RBI’s concessional swap scheme.The sharp increase follows an earlier-than-anticipated closure of the swap scheme. Originally set to close on September 30, the rapid inflow of these deposits led to the RBI closing it one month earlier than initially planned.Till August 31, $127.23 billion of these FCNR(B) deposits had come in.The RBI’s two other concessional swap schemes for Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs) have seen the inflow of $5.26 billion and $3.89 billion, respectively. In total, $136.38 billion had come in until August 31 under the special forex drive that was announced on June 5 and became operational on June 8. The swap windows for OFCBs and ECBs remain open till December 31.Story continues below this adThis forex drive has ensured that India’s forex reserves have risen for 10 weeks in a row. A higher level of forex reserves gives the RBI greater ammunition to defend the rupee when the need arises, as has been the case from time to time.According to former RBI Deputy Governor Michael Patra, the RBI should target a forex reserves level of at least $1 trillion. Writing in a column in March, Patra had argued that this would cover contractual debt service payments which are to mature in 12 months as well as at least 60-65% of the stock of Foreign Portfolio Investment at current market valuations.“Punting against such a level should be beyond the reach of the opportunistic and/or the faint-hearted,” the former central banker had said.To be sure, the FCNR(B) deposits and OFCBs and ECBs have to be paid back in the future and are only a borrowing from abroad. With the RBI swapping these inflows from banks, this is also getting reflected in the central bank’s net short forward book, which stood at a record high of $137 billion at the end of June.Story continues below this adA net short forward book indicates the central bank has sold dollars in the ‘forward’ market and represents a future obligation.Experts have expressed concern over the FCNR(B) deposits’ repayment starting in 2029, with Sandeep Yadav, Head of Fixed Income at DSP Mutual Fund, telling The Indian Express in an interview last week that if India gets foreign money in the coming months and years, the repayment should not be difficult. However, Yadav argued that “structurally, nothing has changed in India to warrant more FX inflows”.So far in 2026, foreign investors have dumped a net $17.8 billion of Indian stocks and bonds after having sold $11.8 billion of them in 2025.In 2024, they had net bought nearly $20 billion.Meanwhile, net Foreign Direct Investment (FDI) inflows have also been weak even though money coming in on a gross basis keeps rising. This is because foreign investors have been increasingly taking back some of the profits on past investments in India. Adding to this pressure has been rising outward FDI by Indian companies.Story continues below this adIn the first six months of 2026, India has seen net FDI inflows of $12 billion, up from $3.1 billion in 2025 and $2.9 billion in 2024. These are far below $35 billion in 20022 and $53 billion in 2020.