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How banks and RBI managed FCNR redemptions

The forex market saw an acute dollar shortage and negative forward premium in November

Anup Roy  |  Mumbai 

November saw redemptions of more than $17 billion of the foreign currency non-resident (FCNR) dollar deposits, out of about $27 billion raised three years ago. But, the huge pressure on the currency market largely went unnoticed because of the demonetisation exercise.    Three years ago, banks had swapped dollars received in these deposits for rupees with the Reserve Bank of India (RBI). At the time of maturity, which is now, banks would give the rupees to RBI and receive dollars to pay their depositors. In November, contrary to earlier expectations, banks did not face ...

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How banks and RBI managed FCNR redemptions

The forex market saw an acute dollar shortage and negative forward premium in November

The forex market saw an acute dollar shortage and negative forward premium in November November saw redemptions of more than $17 billion of the foreign currency non-resident (FCNR) dollar deposits, out of about $27 billion raised three years ago. But, the huge pressure on the currency market largely went unnoticed because of the demonetisation exercise.    Three years ago, banks had swapped dollars received in these deposits for rupees with the Reserve Bank of India (RBI). At the time of maturity, which is now, banks would give the rupees to RBI and receive dollars to pay their depositors. In November, contrary to earlier expectations, banks did not face ... image
Business Standard
177 22

How banks and RBI managed FCNR redemptions

The forex market saw an acute dollar shortage and negative forward premium in November

November saw redemptions of more than $17 billion of the foreign currency non-resident (FCNR) dollar deposits, out of about $27 billion raised three years ago. But, the huge pressure on the currency market largely went unnoticed because of the demonetisation exercise.    Three years ago, banks had swapped dollars received in these deposits for rupees with the Reserve Bank of India (RBI). At the time of maturity, which is now, banks would give the rupees to RBI and receive dollars to pay their depositors. In November, contrary to earlier expectations, banks did not face ...

image
Business Standard
177 22