Millennium Post

Special swap window inflows reach $17.5 bn

The Reserve Bank of India (RBI) on Monday said it has received $17.5 billion so far via the two special windows for swapping foreign currency non-resident (banks) deposits and overseas foreign currency borrowings by banks. The RBI operationalised these windows on 4 September to prop the rupee which had fallen close to 30 per cent between April and August. The window will remain open till 30 November.

The special window allows banks to swap the fresh FCNR (B) dollar funds, mobilised for a minimum tenor of three years and over, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit.

The RBI also allowed banks to borrow up to 100 per cent of tier I capital from overseas, which can be swapped with the central bank at a concessional rate of 100 basis points below the ongoing swap rate prevailing in the market.

The rupee has gained nearly 11 per cent from September till date on account of higher dollar inflows and other measures taken by the RBI and the government.

On 6 November, the RBI said that it had received $15.2 billion from the special concessional window. Many analysts have pegged inflows from these instruments to be in range of $20 to 25 billion.

The rupee was the worst performing Asian currency between end-May and 3 September, losing close to 30 per cent from the beginning of the fiscal. Between 2 April and today, the rupee is still down over 16 per cent.

These two windows, coupled with the one for oil companies under which RBI directly sells dollars to them, apart from the sentiment booster that new governor Raghuram Rajan offered in his inaugural address, have been the main reasons for the massive recoup of the rupee
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