FinMin expects $25 billion inflows via swap windows

The Finance Ministry expects inflows of $25 billion by November end through forex swap windows opened by the Reserve Bank of India (RBI) to attract deposits from non-resident Indians (NRIs) and allow banks to borrow overseas.

Until Monday, RBI had received $17.5 billion through the special windows for swapping foreign currency non-resident (bank) deposits and overseas foreign currency borrowings by banks.

Both were started on September 4 to prop up the rupee, which had fallen almost 30 per cent between April and August.

"Till November 30, our (FCNR-B) window is open. We might even touch $25 billion," Economic Affairs Secretary Arvind Mayaram said on Tuesday.

The battering of the rupee started in May, after the US Federal Reserve hinted at shutting its monthly $85 billion bond purchase programme in a phased manner. The rupee fell to a record low of 68.85 to the dollar on August 28 and recovered on optimism the Fed would delay tapering its bond buying program.

To a query on the impact of the expected US Federal Reserve's withdrawal of its fiscal stimulus, Mayaram said: "When the taper begins, you will see nothing will happen."

The rupee, however, started weakening again last week.

Continuing its slide for the fifth straight day, the rupee on Tuesday lost another 23 paise to trade at 63.47 on strong dollar demand from importers.

Referring to the recent decline in the currency's value against the dollar, Mayaram said: "I think a crazy, irrational kind of a sentiment is (prevailing in the forex market)."

He had earlier said dollar purchases by oil companies had partially shifted to the market from a special swap window opened for them by RBI.