India’s central bank said on Saturday that its special concessional foreign exchange swap facility has mobilised $40.82 billion in inflows since it was opened on June 8, nearly doubling the total recorded two weeks earlier and giving fresh support to the rupee.
In a statement, the Reserve Bank of India (RBI) said total inflows under the facility stood at $40.816 billion as of July 31, up from $20.72 billion as of July 17. “The swap facility has seen avid interest and attracted steady forex inflows since June 8,” the central bank said.
Foreign currency non-resident bank (FCNR-B) deposits accounted for the bulk of the mobilisation at $36.725 billion, up from $17.41 billion in the previous count. Overseas foreign currency borrowings (OFCBs) contributed $2.575 billion, up from $1.97 billion, while external commercial borrowings (ECBs) added a further $1.516 billion, up from $1.34 billion, according to data from authorised dealer banks.
The RBI announced the facility on June 5 as part of a broader package aimed at encouraging foreign currency inflows and supporting the balance of payments, which has been in deficit for a third straight year. Operational since June 8, the window allows banks complete freedom to price their products, while the central bank fully bears hedging costs for three-year and five-year dollar swaps. Fresh FCNR-B deposits are accepted until September 30, while the OFCB and ECB legs remain available until December 31.
The inflows are already visible in India’s foreign exchange reserves, which swelled by $6.12 billion to $682.35 billion in the week to July 24, with foreign currency assets accounting for $4.8 billion of the gain. Reserves remain below the record $728.5 billion touched in the last week of February.
The rupee has also strengthened, closing Friday at 95.39 after touching a high of 95.25, and posting its strongest weekly rally since late March. The currency had slumped to a record low of 96.87 on May 20 before the central bank stepped in with its support measures.
Analysts have raised their estimates for the drive. SBI Research now projects FCNR-B deposits of $65-70 billion, up from an earlier estimate of $40-45 billion, and expects aggregate inflows of $80-85 billion once OFCBs and ECBs are included.
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