RBI Forex Swap Inflows Cross USD 136 Billion
· Business · Indian Express, LiveMint
India's foreign exchange swap facility inflows reached a substantial USD 136.3 billion by August 31, with USD 63.5 billion arriving in the final ten days. Out of this total, USD 127 billion came through the FCNR(B) route, while the remaining balance arrived via External Commercial Borrowings and Overseas Foreign Currency Borrowings. Consequently, RBI's forex reserves rose to a record high of USD 729 billion as of August 21, successfully stemming the rupee's fall. However, this surge in capital inflows has inflated the domestic liquidity surplus from over Rs 3 lakh crore at the start of August to Rs 6.7 lakh crore by the end of the month. The central bank is managing this excess liquidity through variable rate reverse repo auctions alongside expectations of upcoming interest rate hikes by the monetary policy committee.
Why it matters
The massive influx of foreign capital strengthens India's external reserves and supports the rupee, but creates domestic liquidity management challenges for the RBI amid rising inflation risks.
Read the original report — Indian Express
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