Business
Archived — This article has been archived. The information may be outdated.
RBI ends special forex swap facility early after strong inflows
The Economic Times··15 Aug
The Reserve Bank of India will close its special forex swap facility for FCNR(B) deposits early after it attracted $52.3 billion in inflows. The scheme will now accept only deposits mobilised until August 31, with swaps available until September 11. Introduced in June, it along with ECB and OFCB channels drew over $56 billion in total inflows.
Prism
What It Means For You
- If you or your family hold NRE/FCNR deposits abroad, this facility's early closure means the window to route dollar deposits through this specific RBI swap scheme now ends August 31.
- Strong dollar inflows support the rupee, which affects the cost of imported goods, fuel and foreign education or travel for Indian households and businesses.
- Bank customers may see continued high deposit growth in coming weeks, since dollar inflows converted to rupees have already pushed system-wide bank deposits to a record Rs 269.4 trillion.
What's Happening
- The RBI introduced a special USD-INR forex swap facility on June 8 covering FCNR(B) deposits, external commercial borrowings and overseas foreign currency borrowings.
- FCNR(B) deposits alone drew $52.3 billion, prompting the RBI to close that specific channel early while keeping the ECB and OFCB swap window open until December 31.
- As of August 13, the three channels together had generated $56.846 billion in inflows, with OFCBs contributing $2.805 billion and ECBs $1.741 billion.
Adaptive Context
- This is the third such rupee-support scheme India has used, following similar swap facilities launched in 1993 and 2013 during earlier periods of currency pressure.
- The rupee had fallen to 96.96 against the dollar in May before recovering to around 95.17, a move brokerage Jefferies linked partly to this swap facility's success.
- Jefferies had estimated total inflows from these schemes could reach $80-100 billion by the time the facility closes, suggesting the RBI's early closure reflects inflows exceeding expectations.
all-newstop-stories
