India’s foreign exchange reserves up almost $50 billion since July

Kolkata: India’s foreign exchange reserves surged by nearly $50 billion since July as inflows swelled into the banks’ foreign currency non-resident bank (FCNR-B) following the Reserve Bank of India’s measures to attract dollars.

The forex stockpile rose $9.905 billion in the week to August 14 taking the kitty to $716.90 billion, RBI data showed, marking the seven consecutive weekly rise.

The country’s forex stockpile jumped by $49.975 billion in the past seven weeks as inflows poured into FCNR-B deposits of local banks.

Foreign currency assets, the largest component of the reserves, rose $7.2 billion to $581.85 billion, making the biggest contribution to the overall increase. Meanwhile, gold reserves surged by $2.67 billion to $111.41 billion, providing another significant boost.

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Indian banks have received about $53 billion through the special FCNR-B deposit mobilisation scheme till August 14 while another $4.5 billion through external commercial borrowing (ECB) and overseas foreign currency borrowing (OFCB) by banks, RBI data showed. Governor Sanjay Malhota said that the central bank is anticipating around $80 billion inflows.

The RBI has advanced the scheme deadline a month to August 31 since the inflows were more than anticipated. The swap window for FCNR-B deposits will remain open till September 11. The scheme for ECBs and OFCBs will continue to be open till December 31, 2026, as announced earlier.Also read | Tata, Godrej and now Birla: Big business groups aren’t just chasing glitter

The swap, whereby RBI absorbs the annual 280–300 basis point hedging cost for banks, helped the central bank raise its foreign currency assets, people aware said.