RBI Forex Swap: $72.85B Inflow Boosts India’s Liquidity
By Market Desk
India’s RBI successfully attracted $72.85 billion via its USD-INR forex swap facility, significantly enhancing foreign exchange liquidity, primarily through FCNR(B) deposits.
The Reserve Bank of India (RBI) has reported substantial foreign exchange inflows, accumulating $72.85 billion through its specialised USD-INR forex swap facility.
This innovative initiative, launched on June 8, was designed to significantly bolster India’s financial sector liquidity and attract foreign currency through specific channels.
Key Inflow Channels
The total inflows were primarily driven by Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, which proved to be the dominant contributor.
Specifically, FCNR(B) deposits brought in $65.397 billion, representing approximately 90% of the total reported sum.
External Commercial Borrowings (ECBs) added $2.591 billion, while Overseas Foreign Currency Borrowings (OFCBs) accounted for $4.86 billion.
Understanding the Facility’s Purpose
The central bank established this unique swap facility to effectively draw in foreign currency through these defined avenues.
Its core objective remains increasing foreign exchange liquidity within the country, thereby strengthening the overall financial system.
Program Timelines
The scheme operates with distinct deadlines for its various components, influencing participation levels.
The window for FCNR(B) deposits under this special program concluded on August 31.
In contrast, the facility for External Commercial Borrowings and Overseas Foreign Currency Borrowings will remain accessible until December 31.
Impact and Participation
The overwhelming contribution from FCNR(B) deposits highlights their crucial role in the program’s overall success and impact.
This robust participation from both Indian banks and foreign depositors underscores the positive reception and effectiveness of the RBI’s targeted forex initiative.