India's central bank unveiled a discounted foreign exchange swap facility at 1.5% to attract capital inflows and support the rupee. The Reserve Bank of India will offer state-run firms the ability to hedge overseas borrowings at roughly half the prevailing market cost, which currently stands between 2.5-3%. The move comes after the rupee hit a new low against the dollar last month.

The swap facility will have an average maturity of three years and above, making overseas funding more attractive for state enterprises. Banks acting as forex intermediaries can sell dollars to the RBI in multiples of $1 million, with an agreement to repurchase when the swap matures. The discounted rate significantly reduces borrowing costs for Indian firms accessing international markets.

The facility targets new borrowings raised through December 31 and will remain open until January 15. Analysts view this as a direct response to mounting pressure on the rupee. By offering concessional rates, the RBI aims to stabilize the currency while providing Indian businesses with more affordable financing options in the global market.