India's foreign exchange reserves saw a significant increase, jumping by $10.512 billion to reach $692.866 billion for the week ending July 31, according to the Reserve Bank of India (RBI). This growth follows a $6.118 billion increase in the preceding week, pushing the overall kitty closer to its all-time high of $728.494 billion recorded in February this year. The surge is primarily attributed to strong inflows attracted by the RBI's concessional forex swap window.
The foreign currency assets, a major component of the reserves, rose by $8.75 billion to $564.68 billion during the same period. The RBI's scheme, launched in June to attract deposits from non-resident Indians and stabilize the rupee, has been highly successful. As of July 31, total inflows under the three schemes (FCNR(B) deposits, OFCBs, and ECBs) amounted to $41 billion, with FCNR(B) deposits contributing the largest share at $36.7 billion. Public sector banks are targeting nearly $30 billion under this scheme, with State Bank of India alone expecting to mobilize $10 billion.
The RBI Governor, Sanjay Malhotra, affirmed that there are no plans to prematurely close the concessional forex swap window, which is set to conclude for FCNR(B) deposits on September 30. He anticipates continued healthy inflows. Analysts have significantly raised their projections for total inflows under the scheme, with MUFG Bank increasing its estimate to $87 billion from an earlier $60 billion, and SBI Research expecting $80-85 billion, including ECB and OFCB inflows. The robust inflows are aimed at strengthening India's balance of payments and managing rupee pressure.
