Currency in circulation growth hits five-year high, says RBI report | Finance News
Growth in the currency in circulation (CiC) has hit a five-year high owing to deposits under Foreign Currency Non-Resident (Bank), or FCNR(B), resulting in a robust increase in reserve money, according to the Reserve Bank of India’s (RBI’s) “State of the Economy” report.
According to the latest data, the CiC was at ₹43.46 trillion as on October 15, showing a growth rate of 13.5 per cent year-on-year.
Reserve money grew at 10.3 per cent year-on-year to ₹53.24 trillion.
“Reserve money (adjusted for CRR) expanded at a robust pace with growth in currency in circulation recording its highest print over the past five years as on September 30, 2026,” the report, authored by RBI staffers, said.
CiC growth was 13.3 per cent during the fortnight ended September 30.
Following the introduction on June 8 of a special dollar-rupee forex-swap facility covering FCNR(B) deposits, external commercial borrowing, and overseas foreign-currency borrowing, banks had mobilised $133 billion FCNR(B) deposits till August 31, the day the window closed.
The pickup in reserve money, adjusted for changes in the cash reserve ratio, reflects the cumulative liquidity infusion that the RBI did since FY26.
“The central bank net bought ₹8.8 trillion of open-market-operation purchases in FY26, and in FY27, it also infused liquidity by the swap windows,” said Gaura Sen Gupta, chief economist, IDBI First Bank.
“Due to continued forex intervention, as well as a pickup in currency leakage in the festival session, liquidity will tighten even further and reserve money growth will moderate,” she added.
The report further highlighted that the Indian economy had withstood global shocks with high-frequency indicators going up. India’s external sector was resilient, it added.
“Navigating this environment, the Indian economy has been anchored by solid macroeconomic fundamentals and policy interventions to cushion downside risks,” it said.
The report further said the RBI had taken steps to curb speculative activities in the foreign-exchange market.
“The external headwinds are also being dealt with a slew of regulatory measures by the Reserve Bank to curb speculative activity in foreign exchange market,” it said.
The report said that despite being a net energy importer, growth in gross domestic product had been supported by sustained domestic demand and services. The retail inflation rate edged up over the months and showed signs of greater generalisation across commodities, calling for a commensurate change in monetary policy.
“Strong inflows under FCNR(B) swap window augmented reserves. FDI, ECB and remittance flows strengthened in August. With strong exports growth, the trade deficit narrowed in September,” it added.
