Politics · India Bureau
RBI forex swap facility draws $72.85 billion inflows by August 21
The Reserve Bank of India's forex swap facility has mobilised nearly $72.85 billion in external inflows as of August 21, with foreign currency deposits accounting for the bulk of the accumulation. The facility has emerged as a key tool for managing India's external account dynamics.
LSN India ·
The RBI's forex swap mechanism has proven effective in attracting substantial overseas funds, garnering $72.85 billion in cumulative inflows through August 21. The data underscores the central bank's success in channelling foreign liquidity into the Indian financial system during a period of volatile capital flows.
Foreign Currency Non-Resident deposits, commonly known as FCNR(B) deposits, comprised the dominant component of the inflows, accounting for $65.40 billion or nearly 90 per cent of the total. These rupee-denominated deposits held by overseas residents have traditionally served as an important conduit for repatriable foreign funds.
External Commercial Borrowings (ECBs) and Overseas Foreign Currency Bonds (OFCBs) contributed smaller but meaningful portions to the total, bringing in $2.59 billion and $4.86 billion respectively. The diversified composition of inflows reflects varied channels through which overseas investors and borrowers are accessing Indian markets.
The robust response to the swap facility indicates continued confidence in the Indian economy among foreign investors, despite global economic uncertainties. The mechanism allows the RBI to manage forex reserves and liquidity conditions while providing external stakeholders with rupee access at predetermined exchange rates.