External buffers fortified with ‘maximum cost-efficiency’: Finance Ministry on forex swap windows

The Ministry of Finance hailed the response to the Reserve Bank of India's (RBI) concessional swap facilities for FCNR(B) deposits, Overseas Foreign Currency Borrowings, and External Commercial Borrowings as "spectacular." The government added to its external buffers with "maximum cost-efficiency," according to the finance ministry.

The FCNR(B) deposits received until August 21 totaled $65.4 billion, highlighting the strength of the Indian diaspora who have placed trust in the Indian banking system and shown their economic and emotional connection to India's growth story. The RBI's concessional swap facilities, launched on June 8, attracted a total of $72.85 billion as of August 21.

The RBI decided to close the FCNR(B) swap window on August 31, a month earlier than initially planned, as the facility had achieved its objectives ahead of schedule. The scheme, which the RBI bears the entire hedging cost for, is seen primarily as a liquidity and stability measure rather than a tool for sharp currency appreciation or reserve accumulation.