India’s net purchase of US Treasury securities jumped sharply in July as strong overseas dollar inflows boosted the RBI’s foreign exchange reserves and provided more funds for investment in dollar assets.
Highlights:
- India made a record $15.2 billion net purchase of US Treasuries in July; purchases were up sharply from $3.39 billion in June;
- India’s Treasury holdings climbed to their highest level in 10 months; RBI’s special forex facilities brought in $40.8 billion by the end of July;
- India’s forex reserves have also climbed to a record high.
India’s net purchases of US Treasury securities surged to a record $15.2 billion in July 2026, supported by a sharp rise in dollar inflows under special facilities introduced by the Reserve Bank of India (RBI). The purchases increased significantly from $3.39 billion in June and took India’s holdings of US Treasuries to their highest level in 10 months, according to the latest US Treasury Department data cited by Moneycontrol and Bloomberg.
The jump in Treasury purchases came as India witnessed strong overseas capital inflows following measures introduced by the RBI in June. The central bank offered special USD-INR swap facilities covering Foreign Currency Non-Resident Bank deposits, overseas foreign currency borrowings and external commercial borrowings.
By the end of July, around $40.8 billion had flowed into India through these special facilities. The inflows continued to accelerate in August, eventually crossing $136 billion by August 31. FCNR(B) deposits accounted for the bulk of these funds.
The large inflows also strengthened India’s foreign exchange position. RBI data showed that forex reserves reached a record $785.7 billion in the week ended September 4, rising by around $45 billion in a single week.
The surge in Treasury purchases can also be linked to how the RBI manages the dollars received through its swap facilities. Because these transactions create dollar-denominated liabilities for the central bank, part of the funds can be deployed into liquid dollar assets such as US government securities.
Vivek Rajpal, Asia strategist at JB Drax Honore, told Bloomberg that investing these dollars in Treasuries allows the RBI to earn returns that can help offset some of the costs associated with the facilities. He also expects Treasury purchases to remain elevated as India’s foreign exchange reserves have continued to increase.
The development comes at a time when large foreign-currency inflows have given the RBI greater room to manage volatility in the rupee, although they have also created additional domestic liquidity-management challenges.
