RBI’s forex swap draws $136.37 billion, FCNR(B) deposits drive surge

The Reserve Bank of India's special forex swap facility, which allowed for the exchange of US dollars for rupees, attracted a record $136.377 billion in foreign exchange inflows by August 31, surpassing expectations of $70-$80 billion. This surge was primarily driven by Foreign Currency Non-Resident (Bank) deposits, which accounted for $127.226 billion of the total.

Overseas Foreign Currency Borrowings contributed $5.260 billion, while External Commercial Borrowings added $3.891 billion. The Foreign Exchange Swap window was initially set to close on September 30, but the RBI extended it to August 31 following an "encouraging response." The concessional facilities for ECBs and OFCBs remain open until December 31, 2026.

FCNR(B) deposits, which permit non-resident Indians to maintain savings in currencies like the US dollar, euro, and Japanese yen, were the key factor in this surge due to the RBI absorbing currency-hedging costs. The rise in foreign exchange reserves to a record $729.33 billion by August 21 was also attributed to this concessional swap facility, which has since been closed and will be evaluated for the total inflow of $136.377 billion.