Borrowed stability.
Between June 8 and Aug 13, Indian banks raised $52.3 billion in foreign currency through the RBI’s FCNR(B) swap window. The facility, which offers tax-free interest to NRIs, was closed a month early as the rupee stabilized.
The rupee was Asia’s worst performer in 2025-26, with FPIs pulling out heavily. The FCNR window provided dollars without the RBI spending reserves. Banks swapped the dollars with RBI, which absorbed hedging costs.
Economists call this “borrowed breathing space”.
It bought time but did not solve the core issue: low exports and a current account deficit. The money will have to be repaid in 3-5 years, moving risk from RBI to banks.
The lesson: confidence returns with incentives, not just fundamentals. But relying on diaspora deposits is not sustainable. India needs export growth, FDI, and lower oil imports to strengthen the rupee long-term.The FCNR window worked as a stabilizer. Now the real work begins.