The twin swap window, which the central bank made available to banks, fetched $1.4 billion till Thursday and more inflows are expected before the facility closes on November 30. Market participants are expecting the country’s foreign reserves to swell by $10 billion due to the measures. Raghuram Rajan, governor of the Reserve Bank of India (RBI), had announced on September 5 — the day he took charge as RBI chief – that the central bank would offer a window to banks to swap their incremental FCNR (B) deposit, mobilised for a minimum period of three years, at a fixed rate of 3.5 per cent for the tenure of the deposit. RBI had also removed the cap on foreign currency non-resident FCNR (B) deposits, which was capped along with domestic deposits, to give more flexibility to banks while pricing their products. RBI also hiked the overseas borrowing limit of banks from 50 per cent of unimpaired tier-I capital to 100 per cent. Additionally, banks can swap such borrowings with RBI at a concessional rate of 100 basis points (bps) below the ongoing swap rate prevailing in the market. “I am glad to say that banks have started bringing in money. Till yesterday, we had received $ 466 million through the FCNR (B) and $ 917 million through the swap facility to a total of nearly $ 1.4 billion,” Rajan said on Friday, during the post policy interaction with the media. The steps were taken on the back of a sharp fall of the rupee, which hit an all-time low of 68.82/dollar on August 28. Since then, the currency has rebounded, gaining 9.5 per cent against the greenback. According to the latest data released by RBI, the country’s foreign exchange reserves stood at $275.3 billion as on September 13, up $544 million over the previous week. The governor is hopeful more inflows will come through the swap facilities. “We have taken a number of measures, which look like they are pulling in money and will help stabilise the currency. That will allow us to focus on the internal value of the rupee going forward, rather than on the external value of the rupee,” he said.(BS)
Posted on: Sat, 21 Sep 2013 04:13:01 +0000
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