Nginx limit_req_zone limiting at a rate lower than specified

The limit_req_zone configuration in my config is as follow :

limit_req_zone $nginx_version zone=site1:10m rate=1000r/s;

I don't want more than 1000 requests per second from the zone site1. I use this zone in my location as follows :

location /exchange/site1/  
{  
      limit_req zone=site1 nodelay;  
      proxy_http_version      1.1;  
      proxy_set_header        Connection "";  
      proxy_set_header        X-Real-IP $remote_addr;  
      proxy_set_header        REMOTE_ADDR $remote_addr;  
      proxy_set_header        Host $http_host;  
      proxy_set_header        Content-Type application/json;  
      proxy_pass              http://lb-server/site1/;  
      proxy_redirect          off;  
}

However, when I actually use ngxtop to see how many requests I am getting and passing on, I see that site1 is actually sending approximately 600 requests per second but still approximately half of them are getting dropped in nginx. Is there a problem with my configuration? Should I increase the memory space? I tried with 100m but still saw the same behavior. Is there anything else I'm missing here that could help?