The rupee opened 67 paise stronger at 94.30 per US Dollar on the back of a whopping $127.226 billion flowing into Foreign Currency Non-Resident (Bank) deposits under the RBI’s concessional swap facility, which was open from June 8 to August 31.
The Indian currency is currently trading at 94.39 per USD. Intraday, it tested a high/ low of 94.26/94.4350 so far.
Madhavi Arora, Chief Economist, Emkay Global Financial Services, observed that the higher-than-expected FCNR++ (including ECBs and OFCBs) mobilisation of $137 billion likely explains why the RBI chose to close the concessional swap facility early (August 31 against the earlier plan of September 20, 2026).
“With this, the core banking system liquidity could peak above ₹10 lakh crore in September. With the liquidity impact now larger than anticipated, some durable liquidity-absorption tools are likely to be deployed, including FX shorter tenor sell-buy swaps and MSS, or even ICRR (less likely).
“They may also be comfortable now taking delivery of their $32 billion forward book, which is due to mature in 1 year, given the liquidity influx. This could naturally take some liquidity pressure off.
“That said, it is important to recognise that this represents a future dollar-denominated debt liability, with an indirect fiscal cost through lower RBI dividends — potentially amounting to Rs 1 lakh crore+ cumulatively. The funds raised, therefore, need to be deployed judiciously and productively to mitigate these first-order costs,” Arora said.
Sachin Sachdeva, Vice-President & Co-group Head, Financial Sector Ratings, ICRA, said: “The exceptionally strong response from the overseas depositors has led to sizeable FCNR(B) inflows of USD 127.2 billion which has significantly bolstered the liquidity buffers of the banks.
“However, given the magnitude of these inflows, its profitable deployment is likely to take some time and could intensify competition for quality borrowers. Meanwhile, the near-term impact could be lower loan yields and some moderation in margins.”
Published on September 3, 2026
