The Indian Rupee faced pressure on Monday, closing at a two-week low of 95.61 against the US Dollar. The currency fell by 18 paise from its previous close of 95.43. This decline happened because the Reserve Bank of India (RBI) decided to stop a special scheme early. The scheme, called the 'concessional swap facility', was designed to help banks bring in more Foreign Currency Non-Resident-Bank (FCNR-B) deposits. FCNR-B deposits are fixed deposits kept in foreign currency by Non-Resident Indians (NRIs).

Under this facility, banks could swap their foreign currency for rupees with the RBI at a cheaper rate. The RBI originally planned to keep this open until September 30, 2026. However, on August 14th, the central bank announced it would pull the plug a month early. Now, the facility will only apply to deposits raised until August 31, 2026. Banks can complete their swap deals with the RBI only until September 11, 2026, instead of the previous October deadline.

The RBI likely ended the scheme because it was too successful. Between June 8, 2026, and August 13, 2026, banks collected a massive $52.30 billion through these deposits. Soumya Kanti Ghosh, the Group Chief Economic Advisor at SBI, noted that the target for mobilization has already been met. He expects total collections could reach $85 billion by the end of August. This huge inflow helps India's Balance of Payment (the record of all transactions between India and the world) stay in a surplus of about $50 billion.

For bank officers, this news is important because it changes the liquidity (cash flow) of dollars in the market. As the deadline nears, there is a rush to close these deals. On Monday, the rupee touched a low of 95.62 during the day. Forex traders reported that the RBI had to step into the market to sell dollars. By selling dollars, the RBI helps support the rupee so it does not crash too quickly against the American currency.

Some experts wondered if the RBI stopped the scheme to save money on hedging costs (the cost of protecting against currency price changes). However, SBI’s research team believes the cost was not the main problem. The total cost of these swaps is estimated at $10.5 billion over five years. While this sounds like a lot, it is only about 1.45% of India’s total foreign exchange reserves, which currently stand at a strong $700 billion.

Looking ahead, aspirants and bankers should watch the CAD (Current Account Deficit). The CAD is currently at 1% of the GDP (Gross Domestic Product), which is considered healthy. With the FCNR-B scheme winding down, the market will now focus on regular commercial dollar demand from importers. The RBI’s active presence in the market suggests they will continue to manage volatility (sudden price changes) to ensure the rupee stays stable in the coming weeks.