{
  "id": 1499301,
  "title": "India's dollar-raising blitz cut short on BoP comfort, policy trade-offs, analysts say",
  "url": "https://urgent.news/2026/08/17/indias-dollar-raising-blitz-cut-short-on-bop-comfort-policy-trade",
  "topic": "business",
  "section": "Business",
  "published": "2026-08-17T14:08:25.000Z",
  "source": {
    "name": "Business Recorder",
    "slug": "business-recorder",
    "url": "https://www.brecorder.com/news/40435216/indias-dollar-raising-blitz-cut-short-on-bop-comfort-policy-trade-offs-analysts-say"
  },
  "original_language": "en",
  "account": "MUMBAI: Following a surge in foreign deposits, the Reserve Bank of India (RBI) prematurely terminated its zero-cost foreign exchange (FX) swap facility for banks, according to analysts. The move came a month ahead of schedule, as the central bank weighed concerns about domestic liquidity effects and the costs associated with fundraising. The inflow of more-than-expected $50 billion from non-resident Indians into Indian banks over two months triggered the decision. Experts believe the RBI may have deemed that maintaining the window open through September would yield diminishing returns. The overseas fundraising formed part of a series of measures taken by Indian authorities to bolster the rupee, which had plummeted to record lows in May. The measures have collectively attracted nearly $57 billion, bolstering foreign exchange reserves to over $700 billion. Vivek Rajpal, Asia macro strategist at JB Drax Honore, stated that overseas FX deposits could potentially reach around $70 billion by the end of August, representing roughly 10% of India's headline FX reserves, which analysts consider comfortable for the RBI. The accumulation of these deposits could create challenges in managing rupee liquidity when they mature in three to five years, warns Gaura Sen Gupta, chief economist at IDFC First Bank. While the measures have bolstered the balance of payments, the early closure of the FX swaps could diminish the projected surplus somewhat. Economists at Citi have adjusted their balance-of-payments surplus forecast to $53 billion from $60 billion earlier, with a projected deficit in October-December. A premature end to the FX window and the projected balance of payments trajectory might indicate that 95 paise per dollar could become the top for the rupee in the near term, according to Citi economists. The decision to end the FX window and the resulting balance of payments trajectory may imply that the rupee's depreciation bias would be limited, as the improved reserve position would mitigate further depreciation. However, the liquidity impact and the cost of undertaking the swaps were also considered factors in the central bank's decision to shut down the scheme, as excess liquidity in the system can exacerbate inflationary pressures and keep short-term interest rates below the policy rate, undermining monetary policy objectives.",
  "summary": "MUMBAI: Strong inflows from a foreign deposit drive prompted the Indian central bank to cut short a zero-cost FX swap facility for banks, with policymakers also wary of the domestic liquidity effects and the cost of such fundraising, analysts said. The Reserve Bank of India brought forward on Friday the last date for its swap facility by a month after banks collected a more-than-expected $50…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}