Updated
Updated · BusinessLine · Jun 14
RBI Launches Dollar-Rupee Swap to Draw Inflows as FY27 CAD Risks Top 2% of GDP
Updated
Updated · BusinessLine · Jun 14

RBI Launches Dollar-Rupee Swap to Draw Inflows as FY27 CAD Risks Top 2% of GDP

3 articles · Updated · BusinessLine · Jun 14

Summary

  • India’s central bank has offered dollar-rupee swap facilities to banks for fresh 3-5 year FCNR(B) deposits and to PSUs raising overseas commercial borrowings, while taking on the hedging cost to pull in foreign currency.
  • The move targets a weakening financing mix: FPI equity outflows have exceeded ₹2.5 lakh crore in 2026, net NRI deposit inflows fell 11% to $14.4 billion in FY26, and external commercial borrowings dropped 23% to $14.2 billion.
  • Those pressures come as analysts see FY27’s current account deficit rising above 2% of GDP, driven by higher oil prices, a wider goods trade gap and uncertainty over whether remittances can offset import costs.
  • India still posted a surprise $7.1 billion current account surplus in Q4 FY26 on strong services exports and remittances, though FY26 as a whole logged a $25.2 billion deficit, or 0.6% of GDP.
  • Banks have already raised FCNR(B) deposit rates by 200-400 basis points, and the RBI and government are also trying to channel more foreign money into debt markets through tax breaks on government securities.

Insights

Can India’s policy fixes overcome its complex tax system to win back fleeing foreign investors?
Will India's new free trade deals with the EU and UK break its historical trend of widening deficits?
What is India's long-term plan to break its critical energy dependence exposed by the Iran war?