Economy · 18 Aug 2026

RBI forex swap facility FCNR(B)

Consider the following statements:

  1. India's 10-year benchmark bond yield rose by less over the six months to mid-August 2026 than the yields of the United States, Japan, South Korea and Indonesia over the same period.
  2. Under the RBI's targeted forex swap facility, the currency-hedging risk on inflows is borne by the RBI rather than by the depositing bank.
  3. The Bloomberg Global Aggregate Index included India's sovereign bonds following the sustained inflows attracted by the swap facility.
A1 only
B2 only
C1 and 2 only
D1, 2 and 3
This question is based on: The NRI Deposit Scheme Quietly Doing the MPC's Job For It
Take this in full test mode → Instructions for 18 Aug 2026
About this question

Why in news

The RBI's targeted forex swap facility, launched June 8, attracted $56.8 billion in dollar inflows by August 13 - enough that the RBI moved up the window's closing date to August 31 from the originally planned end-September - while the MPC held rates steady for three consecutive meetings.

Why for UPSC

Tests whether the candidate can separate the mechanism actually stabilising yields (RBI absorbing currency risk via the swap facility) from an adjacent but unrelated development (the Bloomberg index deferral), a distinction current-affairs coverage often blurs together.

Prelims summary

The RBI's swap facility drew $56.8 billion (mostly via FCNR(B)) by absorbing currency-hedging risk itself, helping India's 10-year yield rise just 8 bps against much sharper rises abroad - even as the Bloomberg Global Aggregate Index deferred, not granted, India's bond inclusion.

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