The Reserve Bank of India (RBI) has confirmed it has no immediate plans to close its special foreign exchange (forex) swap window, despite experiencing robust inflows, particularly from Foreign Currency Non-Resident (FCNR) deposits. RBI Governor Sanjay Malhotra stated that the scheme, which was introduced in June to stabilize the rupee and bolster foreign reserves, has been highly successful.
Since its inception, the concessional swap scheme has attracted significant capital. As of August 1, 2026, total inflows reached $40.8 billion. A substantial portion of this, $36.72 billion, came specifically from FCNR(B) deposits, surpassing the approximately $26 billion raised through a similar window in 2013. Governor Malhotra emphasized that these measures have further fortified India's already strong external position.
Rupee Under Pressure, Now Stabilizing
Earlier in May 2026, the Indian rupee faced considerable pressure, weakening to a record low of 96.90 against the US dollar. This depreciation was largely attributed to the US-Iran conflict in West Asia, which caused a surge in crude oil prices and subsequently inflated India's import bill. Massive selling by foreign portfolio investors (FPIs) in the equity market, totaling around Rs 2.50 lakh crore this year, also contributed to the currency's decline.
However, recent measures, coupled with FPIs turning net buyers in July (investing Rs 20,200 crore), and cooling oil prices, have helped alleviate some of the pressure. On August 4, 2026, the rupee closed at 95.38 against the dollar, appreciating further to approximately 95.13 the following day. While these gains are modest compared to the appreciation seen during the 2013 window, a ratings agency official noted that without the RBI's interventions, the rupee could have fallen closer to 98.
RBI's Outlook and Expert Views
Governor Malhotra expressed optimism that the rupee could strengthen further as geopolitical tensions de-escalate. He reiterated the central bank's policy of not targeting a specific band for the rupee but intervening only when there is excessive volatility. The special forex window is scheduled to close on September 30, with no specific target set for total inflows.
Experts largely concur with the positive outlook. Jateen Trivedi, VP research analyst at LKP Securities, suggested that sustained FII inflows, softer crude prices, and a stable dollar could bias the rupee towards appreciation, though global geopolitical developments remain a key factor. Tanvee Gupta Jain, chief India economist at UBS, expects India's balance of payments position to improve significantly, potentially shifting from an estimated deficit of $50 billion to a surplus of 0.5 percent of GDP in FY27, largely due to the RBI's aggressive measures to mobilize foreign currency funding.