India Economics: How to Interpret the FCNR(B) Swap Data in a Broader Macro Context?

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India Economics: How to Interpret the FCNR(B) Swap Data in a Broader Macro Context?

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21 Jul 2026 09:41:22 ET │ 15 pages

India Economics

How to Interpret the FCNR(B) Swap Data in a Broader Macro Context?

CITI'S TAKE

Economics

We provide tentative explanation of some puzzles related to RBI swap

facility related flows. RBI reported $20.7bn inflow in the first-40 days of the Samiran Chakraborty AC

scheme and we maintain our view of at least USD 55-60bn collection under +91-22-6175-9876

these schemes, but with upside risk. That said, RBI forex assets are up only samiran.chakraborty@citi.com

~3bn as of 10th July and INR liquidity remains tight. This could be because

of (1) some time lag between inflows and swaps, (2) offsetting of forward Baqar M Zaidi, CFA AC

positions, (3) possibly some swaps for future coupon payments, (4) +91-22-6175-9877

rebooking of existing FCNR (B) and/or (5) other BoP outflows. Banking baqar.zaidi@citi.com

system liquidity will improve along with FX reserves, and we expect durable

liquidity closer to INR 8-9trn by end Dec-2026, with VRRR as the main

liquidity absorption tool. We think RBI could use FCNR(B) tailwind to push

USDINR towards a more “fair value” of 94.0 in the near term.

RBI swap facility inflow: 2013 vs 2026-to date and bull scenario — RBI reported

$20.7bn inflow in the first-40 days of the scheme in 2026, out of which majority

(USD 17.4bn) has come through the FCNR(B) deposits route. In 2013, the first 50

days saw $10.1bn inflow, with remaining $24bn inflow coming in the next 38-days,

suggesting back-ended flows. We retain our view of total $55-60bn inflow under

this scheme. For a more bullish scenario ($80-90bn inflow) to play out we would

need Indian banks to have better ability to leverage without widening credit spreads,