The cost of the Reserve Bank of India’s (RBI) FCNR(B) swap facility is unlikely to have been a major factor behind the central bank’s decision to close the window for fresh deposits a month ahead of schedule, SBI Research said in its latest Ecowrap report.
The research report estimated that the cumulative hedging cost of the facility could reach around USD 10.5 billion over five years, but said this would remain relatively small compared with India’s foreign exchange reserve buffer.
