India central bank may supply dollars to during FCNR redemption

07 Jun, 2016

MUMBAI: The Reserve Bank of India may step in to supply dollars in case of extreme volatlity once a concessional swap facility for non-residents starts to mature in coming months, RBI Governor Raghuram Rajan said on Tuesday, though he warned markets not to be complacent.

Rajan said the outflow from the concessional swap facility to get foreign currency non-resident (bank), or FCNR (B) deposits could be $20 billion.

The RBI governor reiterated the central bank's commitment to supply short-term funds into the banking system and said the transmission of policy rate cuts remains a work in progress.

Earlier today, the RBI left its key policy rates unchanged, while cautiously signalling it could cut later this year if monsoon rains, and other factors, dampen upward pressure on food prices.

Copyright Reuters, 2016

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