The Reserve Bank of India (RBI) has decided to close the FCNR(B) swap window earlier than planned due to robust foreign exchange inflows and increasing liquidity costs. This move aims to manage the growing liquidity pressures in the Indian financial system.
According to FX Street and Commerzbank, the RBI’s early closure reflects the central bank’s response to the strong demand for foreign currency non-resident (bank) deposits and the associated costs rising in the market. The FCNR(B) swap window is a key tool used by the RBI to regulate foreign currency liquidity and support the Indian Rupee.
For Japanese investors and market participants, this development signals the RBI’s active stance in managing currency and liquidity risks, which could influence cross-border capital flows and the broader emerging market sentiment.