Now Reading: RBI closes FCNR(B) swap window early after $52.3 bn inflow
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RBI closes FCNR(B) swap window early after $52.3 bn inflow
The Reserve Bank of India has brought forward the closure of its special FCNR(B) deposit swap facility to August 31 after banks raised $52.3 billion (over Rs 4.9 lakh crore) in just…
The Story in Brief
The Reserve Bank of India has brought forward the closure of its special FCNR(B) deposit swap facility to August 31 after banks raised $52.3 billion (over Rs 4.9 lakh crore) in just over two months, far exceeding expectations. Total forex inflows under the scheme stood at $56.85 billion. The RBI cited 'encouraging response' for the early closure, a reversal from Governor Sanjay Malhotra's recent statement that there were no immediate plans to close it. The facility was introduced in June to stabilise the sliding rupee. The 2013 version had raised only $34 billion.
The Indian Opinion
The early closure of the FCNR(B) swap facility has drawn criticism from those who wanted the scheme to run its course. But the RBI's move is prudent: $52 billion in two months far exceeded expectations, and the associated rupee liquidity risks inflation. Governor Malhotra's earlier denial of immediate closure may seem contradictory, but central banks must stay flexible. The key number to watch is inflation in coming months, if it stays contained, the early closure was the right call.
Sources (3): ndtvprofit.com, livemint.com, bfsi.economictimes.indiatimes.com
This story was synthesised by AI from the 3 sources linked above.
Updated: this story now draws on 3 sources.
