The Reserve Bank of India has attracted over $56.84 billion through its concessional swap facility, boosting foreign exchange reserves to their highest level in recent weeks amidst ongoing global economic uncertainties.
The Reserve Bank of India has attracted $56.84 billion through its concessional swap facility as of August 13, underscoring strong demand for foreign currency inflows at a time when the rupee has been under pressure. According to a central bank statement reported by PTI, the bulk of the money came through Foreign Currency Non-Resident, or FCNR(B), deposits, with smaller contributions from overseas foreign currency borrowings and external commercial borrowings.
The swap window was opened on June 8 and offers banks a way to raise foreign currency deposits at attractive terms. Moneycontrol reported that the facility carries a fixed cost of 1.5% a year, compounded semi-annually, with a maximum tenor of five years. Business Standard said the measure applies to eligible public-sector undertakings and banks, and is intended to support overseas borrowing while helping to shore up foreign exchange inflows.
The RBI has now tightened the timing for FCNR(B) participation. ThePrint reported that while the facility was earlier set to remain open for deposits mobilised until September 30, it will now be available only for deposits raised by August 31, reflecting the strong response so far. The central bank also said the swaps under this facility may be availed with it until September 11, 2026, while the scheme for external commercial borrowings and overseas foreign currency borrowings will stay open until December 31, 2026.
The inflows come as India’s foreign exchange reserves have risen sharply. The RBI said reserves jumped by $14.136 billion to $707.002 billion in the week ended August 7, after a gain of $10.512 billion in the previous week. Foreign currency assets, the largest component of the reserves, rose by $9.946 billion to $574.625 billion, according to the central bank’s data. Reuters has previously noted that the RBI has been using the forex market to cushion the currency as global uncertainty and tensions in West Asia have weighed on sentiment.
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