RBI Ends FX Swap Facility Early as Overseas Inflows Near $57 Billion
The early closure changes the near-term liquidity and foreign-funding backdrop for banks and the rupee, while reducing the remaining window for banks to use the facility.
What changed
Reuters reported that the RBI brought forward the closing date of the zero-cost FX swap facility for banks by one month, to 31 August, after banks collected more than $50 billion of deposits from NRIs. Reuters said the measures had brought in nearly $57 billion and lifted reserves above $700 billion.
Why it matters
The early closure changes the near-term liquidity and foreign-funding backdrop for banks and the rupee, while reducing the remaining window for banks to use the facility.
Who is affected
Banks, NRIs, foreign-currency deposit markets, forex dealers and fixed-income/FX investors.
Action required
Banks and affected treasury teams should review the RBI announcement and their remaining eligible transactions. Do not infer that all overseas deposits are covered by the swap facility.
What happened
Reuters reported that the RBI brought forward the closing date of the zero-cost FX swap facility for banks by one month, to 31 August, after banks collected more than $50 billion of deposits from NRIs. Reuters said the measures had brought in nearly $57 billion and lifted reserves above $700 billion.
Why it matters
The early closure changes the near-term liquidity and foreign-funding backdrop for banks and the rupee, while reducing the remaining window for banks to use the facility.
What readers should do
Banks and affected treasury teams should review the RBI announcement and their remaining eligible transactions. Do not infer that all overseas deposits are covered by the swap facility.
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