Veena Venugopal Published September 4 2026 The Reserve Bank of India’s special foreign exchange swap scheme attracted over $127bn from the Indian diaspora, nearly doubling initial estimates and allowing the central bank to close the programme a month ahead of schedule. Banks have until September 11 to execute swaps against deposits already received. The scheme, last used in 2013 during a rupee crisis, offered swaps at par and exempted eligible deposits from statutory reserve requirements, making dollar holdings cheaper for banks.

This incentivized lenders to raise rates on non-resident Indian dollar deposits from around 5% to over 7%. As a result, India’s foreign exchange reserves rose to a record $729.33bn in August, up roughly $63bn over eight weeks. However, the rupee continued to weaken, trading at about Rs94.42 to the dollar on Thursday, weighed down by global uncertainty and geopolitical risk.

While the RBI gained breathing room on reserves, critics note it has merely deferred the underlying currency pressure, hoping foreign inflows will resume by the time the swapped dollars come due.