“In addition, we have got more than $7 billion inflows in government securities since June 5 when the policy announcements with respect to government securities were made. At this pace, the total inflows are likely to be robust,” he added.

Malhotra’s update comes a week after the RBI said that between June 8 – when the swap facility became operational – and July 17, a total of $20.72 billion had been raised, with $17.41 billion of it on account of FCNR(B) deposits.

After early jitters on how successful the special drive to raise money from abroad would be, inflows have picked up rapidly and may have already crossed the total amount that was raised in 2013, when potential tightening of US monetary policy and concerns about high inflation in India had spooked foreign investors and led to a sharp decline in the rupee’s exchange rate.

In 2013, the RBI’s swap facilities had ended up raising around $34 billion in total, with $26 billion coming from FCNR(B) deposits.

The three concessional swap facilities were announced by the RBI on June 5. The FCNR(B) scheme, under which the central bank will bear the full exchange rate hedging cost for fresh 3-5-year deposits, is available till September 30. Meanwhile, the swap facility for External Commercial Borrowings and Overseas Foreign Currency Borrowings (OFCBs) is open till December 31.

According to SBI’s Soumya Kanti Ghosh, new FCNR(B) deposits under the swap scheme could be in the range of $65 billion-$70 billion. Including ECBs and OFCBs, the overall figure could be $80 billion-$85 billion.

The swap facilities announced by the RBI on June 5, along with the Centre’s decision to exempt foreign investors from paying a withholding tax on their government bond investments as well as the removal of capital gains tax, led to an immediate revival in the rupee’s fortunes, which was seemingly moving towards the 100-per-dollar mark after nearly breaching 97 in May as the war in West Asia hit sentiment hard. On Monday, it was trading around 95.9 per dollar.

Foreign inflows in government bonds have surged following the June 5 announcements. After net outflows of $1.8 billion over March-May, June saw $5.85 billion come in. So far in July, $2.71 billion has come into government bonds.

Foreign investors have also started making a comeback of sorts to the stock market, which have bled heavily in the face of geopolitical events as well as the global AI investment boom bypassing India due to its low exposure to the latest technology. After nearly $28 billion of net outflows over March-June, there have been net foreign inflows of $1.57 billion so far in July.

However, on the Foreign Direct Investment (FDI) front, net inflows returned to negative territory in May after a gap of four months. From an inflow of $6.58 billion in April, May saw an outflow of $74 million.

Weak FDI inflows have been a key reason for the rupee’s travails. In his interview to The Hindu Businessline, Malhotra said it would be “reasonable to think that the rupee is not overvalued”.

“If anything, one could argue that the rupee has become undervalued, both in nominal and in REER (real effective exchange rate) terms. Once the situation in West Asia stabilises, one could very well see the rupee appreciate as one has seen during similar past periods and episodes of external shock-driven volatility,” the central bank chief said.