MUMBAI: The Reserve Bank on Saturday said total inflows through the concessional foreign exchange swap facility have reached $40.82 billion since it was opened on June 8. Of this, foreign currency non-resident bank (FCNR(B)) deposits accounted for the bulk of the mobilisation, contributing $36.72 billion.
This is a big boost to the central bank’s efforts at shoring up the forex kitty and thus prop up the rupee as the fund gathering doubled in the fortnight since the first announcement on July 17, when it stood at $20.72 billion.
In a statement issued Saturday, the central bank said the FCNR-B deposits contributed $36.725 billion, up from $17.41 billion as of the last count on July 17. The overseas foreign currency borrowings (OFCBs) accounted for $2.575 billion, up from $1.97 billion and the external commercial borrowings (ECBs) brought in a further $1.516 billion, up from $1.34 billion from the earlier count.
“According to data received from authorised dealer banks, total inflows under the facility stood at $40.816 billion as of July 31,” the monetary authority said, adding “the swap facility has seen avid interest and attracted steady forex inflows since June 8," the apex bank said.
The rising inflows has had its positive rub-off on both the objectives with the forex kitty swelling by $6.12 billion to $682.35 billion for the week to July 24. Of this, as much $4.8 billion came in the form of foreign currency assets, clearly indicating the impact of the special mobilization drive. But the forex kitty is down from its record high of $728.5 billion recorded in the last week of this February.
Similarly, the rupee has been gaining ground, with the unit closing the week ending July 30 with the strongest weekly rally since end-March. The rupee closed at 95.39 on Friday, after touching a high of 95.25, a up from 95.68 in the previous day. This is a massive gain for the beleaguered unit that has slumped to a record low of 96.87 on May 20.
The RBI had announced the concessional swap facility on June 5 as part of a broader package aimed at encouraging forex inflows and supporting the balance of payments, which is in deficit mode for the third year running. The facility was operationalised three days later, on June 8 and it allows banks complete freedom to price their products apart from the central bank fully bearing the hedging cost for the three-year and five-year dollars.
The window will remain open until September 30, for fresh FCNR-B deposits, while the facilities linked to OFCBs and ECBs will be available till December 31. The higher inflows led analysts to raise their estimates for the total inflows, with SBI Research projecting FCNR-B deposits at $65-70 billion, up from its earlier estimate of $40-45 billion. Taking OFCBs and ECBs into account, it expects aggregate inflows of $80-85 billion.SBI expects mobilisation to gather more speed in the coming months, particularly as deposits reaching maturity in August and September could be rolled over under the new facility, which it expects to add around $10 billion more to the overall kitty.