New Delhi, Aug. 26 -- Why RBI Closed the FCNR(B) Swap Window a Month Early, Despite Saying It Wouldn't

On August 5, RBI Governor Sanjay Malhotra said there was no proposal under consideration at that point to close the special FCNR(B) window early. Nine days later, RBI moved the deadline from September 30 to August 31. That looks like a reversal, but it is better read as a policy decision made after conditions changed quickly rather than as a broken commitment.

RBI's reply to the deadline change was an "encouraging response," and foreign exchange inflows followed. FCNR(B) deposits under the facility had reached USD 52.3 billion by August 13; by August 21, RBI data showed that figure at USD 65.397 billion. The window had attracted far mo...