The Reserve Bank of India’s (RBI) window to attract foreign currency deposits that saw shutters drop on 31 August, one month ahead of the initial schedule, has brought in a flood of dollars. RBI on Wednesday said that as much as $127.2 billion has been collected by banks as forex deposits.

A further $9.2 billion came in through overseas foreign currency and external commercial borrowings, which remain open, taking total inflows since the mop-up began to $136.4 billion.

RBI’s forex reserves have bulged as a result, having recently hit a record $729 billion, and while excess liquidity has been something of a challenge, India’s central bank is better placed to contain rupee volatility in case the currency suffers the fallout of balance-of-payments stress.

A rupee slump has been a put-off for foreign investors in Indian assets, with their dollar returns eroded by its weakness. A focus on the exchange rate, however, interferes with monetary policy.

For this reason, if not the cost RBI may eventually have to bear for the forex-risk hedge it granted deposit-taking banks, no one should miss the scheme that just ended. Except, perhaps, overseas Indians who got a splendid chance to make gains.

The Reserve Bank of India’s (RBI) window to attract foreign currency deposits that saw shutters drop on 31 August, one month ahead of the initial schedule, has brought in a flood of dollars. RBI on Wednesday said that as much as $127.2 billion has been collected by banks as forex deposits.

A further $9.2 billion came in through overseas foreign currency and external commercial borrowings, which remain open, taking total inflows since the mop-up began to $136.4 billion.

RBI’s forex reserves have bulged as a result, having recently hit a record $729 billion, and while excess liquidity has been something of a challenge, India’s central bank is better placed to contain rupee volatility in case the currency suffers the fallout of balance-of-payments stress.

A rupee slump has been a put-off for foreign investors in Indian assets, with their dollar returns eroded by its weakness. A focus on the exchange rate, however, interferes with monetary policy.

For this reason, if not the cost RBI may eventually have to bear for the forex-risk hedge it granted deposit-taking banks, no one should miss the scheme that just ended. Except, perhaps, overseas Indians who got a splendid chance to make gains.