Now Reading: RBI closes FCNR swap window early, banks scramble
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RBI closes FCNR swap window early, banks scramble
Business Today reports that the Reserve Bank of India's decision to close the FCNR(B) deposit swap window earlier than expected has left banks scrambling and renewed concerns about policy communication. Markets reacted sharply, with the rupee recording its biggest decline in nearly a month and five-year government bond yields posting their biggest rise in more than a month. The scheme was initially introduced on June 8 and was scheduled to run until October 16.
Economists quoted by Business Today question the rationale, noting that the hedging cost of about $10.5 billion was small relative to RBI's $700 billion forex reserves. SBI had committed to raising $10 billion and had mobilised around $6 billion by early August. Gulf News reports that total inflows through FCNR(B) deposits, OFCBs and ECBs had reached $56.846 billion as of August 13, with FCNR(B) deposits making up the largest share at $52.3 billion. The ECB and OFCB windows remain open.
Indian Opinion Analysis
Business Today frames the RBI's move as a communication failure that rattled markets, foregrounding criticism from economists who question the cost rationale. Gulf News reports the same factual change neutrally, without noting any market disruption or policy confusion. The difference reflects editorial focus rather than factual disagreement: the central bank did close the window early, and inflows were strong. What remains unexamined in either source is whether the early closure was driven by unstated concerns such as overheating or liquidity management. Watch for the August-end deadline for banks to complete mobilisation, and whether the rupee stabilises.
Coverage: 2 sources, 1 government-critical, 1 neutral
Sources (2): businesstoday.in (government critical), gulfnews.com (neutral report)
This story was synthesised by AI from the 2 sources linked above. Methodology and corrections.
Updated: this story now draws on 2 sources.
