RBI has record forex reserves, but why is rupee still not out of the woods?

India’s foreign exchange reserves are climbing to new record highs, thanks to the RBI’s FCNR(B) deposits scheme that has resulted in bumper inflows. Forex reserves are an important buffer that can help the central bank control any rapid decline in the rupee.In fact, earlier this month when the news of record inflows came in, the rupee rallied strongly to a two-month high. India's forex reserves hit a record $785.71 billion in the week of September 4, 2026, jumping $44.9 billion in a single week - the biggest weekly rise ever. This has been due to the record $136.38 billion that has come in through the central bank’s special dollar swap scheme which it launched in June.But that strength in the rupee has failed to hold. The currency is now hovering back to its two-month lows.