RBI's Forex Swap Facility Draws Record $136 Billion in Foreign Exchange Inflows

The Reserve Bank of India's special US dollar-rupee forex swap facility has drawn provisional foreign exchange inflows of $136.377 billion through August 31, exceeding expectations by a significant margin.

Foreign Currency Non-Resident (Bank), or FCNR(B), deposits accounted for the overwhelming share of the mobilisation at $127.226 billion, while Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs) contributed $5.260 billion and $3.891 billion respectively.

The RBI had initially opened the FCNR(B) swap window until September 30 but announced on August 14 that it would close early on August 31, following an 'encouraging response'. The concessional facilities for ECBs and OFCBs remain open until December 31, 2026.

The strong response was also helped by higher interest rates offered by banks, with several offering FCNR(B) rates of around 6-6.5% and some smaller banks offering rates of about 7-7.5%.