India’s dollar window: foreign banks prepare to pile in | beyondbrics

India’s dollar window: foreign banks prepare to pile in | beyondbrics:

"

Raghuram Rajan, India’s new central bank governor, faces a nervous few days as he waits for Federal Reserve tapering news later on Wednesday and ponders a tricky interest rate decision on Friday. But at least one of his initial wheezes, to support the rupee by attracting dollars from Indians living abroad, seems to be working out nicely – thanks in large part to the efforts of western banks.

When he took office at the Reserve Bank of India earlier this month, Rajan gave a press conference outlining a number of planned financial sector reforms. His performance was received rapturously in India – even earning comparisons with James Bond in one newspaper — while his announcements have been credited with spurring a recent recovery in the currency.

His more technical plans included a temporary currency swap window, which would allow banks to take dollars on deposit from wealthy Indians living in foreign countries and swap them into rupees more cheaply than on the open market. For global banks, this makes it much more attractive to take deposits in dollars, while offering their clients attractive Indian-level returns."

'via Blog this'