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The Reserve Bank of India has received $34 billion through the dollar swap windows for FCNR(B) funds and Banks' Overseas Borrowings from mid-July to November, the RBI said.
“The two swap windows have mobilised $34 billion. Since the RBI swap windows are now closed, going forward, any new funds raised from FCNR deposits or from banks' borrowings will flow directly into the market instead of to RBI's FX reserves,” RBI said in a statement.
The dollar swap windows were opened by the central bank to stabilise the depreciating rupee. The rupee had touched 68.80 per dollar on August 28. However, it has recovered to 62 levels since the announcement of the measures.
The RBI also said that, “Beginning last week, the public sector oil public sector oil marketing companies (OMCs) have started accessing the FX (foreign exchange) market for their entire daily dollar demands. Going forward, RBI has advised the OMCs to smoothen their daily dollar demand, so that the upcoming bunched up demands on any particular day is covered in advance in the forward forex market or covered on days with low demand.
“Apart from covering in the forward markets, the OMCs have also been advised to utilise the revolving lines of credit made available by banks with the specific objective of tiding over humps in dollar demands,” the RBI added.
To reconsider swap windows
The RBI also said it will consider opening the swap window to OMCs on the rare days when there is a pronounced spurt in dollar demand in the FX market.
“Given the backdrop of broad stability returning to the forex market, on the basis of an ongoing review of the demand conditions in the market, OMCs have been allowed to source dollars even beyond their normal daily requirements. This process has already been put in place last week and it is expected that the excess demand of the OMCs will be funnelled to meet their swap (second leg) commitments over a period of time.
As indicated earlier, the Reserve Bank is closely monitoring the market and will continue to keep all options open regarding settlement of OMC swaps, including Rupee settlement, depending upon the evolving flow dynamics in the market.
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