The newly-appointed Governor Raghuram Rajan yesterday said RBI will offer a window to banks to swap the fresh FCNR-B dollar funds, mobilised for a minimum tenor of three years and over, at a fixed rate of 3.5 per cent per annum.

According to Bank of America Merrill Lynch (BofA-ML), "the move (FCNR-B) should fetch $8-10 billion," adding that the move would help in shifting rupee risks away from NRIs at a time of extreme volatility.Echoing sentiments, Morgan Stanley said the "measures announced by RBI are somewhat similar in nature and can help augment capital inflows and cushion the funding pressures to some extent in the near term."

The rupee, which had touched an all-time intra-day low of 68.85 to a dollar on August 28, today strengthened by hefty 138 paise to trade at 65.69 against the dollar at the Interbank Foreign Exchange market after fresh measures by the RBI to stem the currency's slide.

BofA-ML further said the FCNRB deposit-cum-swap facility is expected to stabilise rupee in absence of a major FX shock. Earlier, similar schemes like the 1998 Resurgent India Bonds and the 2001 India Millennium Deposits, each of which had raised $5 billion, had been extremely effective in this regard, it added.

Morgan Stanley noted that significant currency pressures bring a need to raise NRI dollar deposits through aspecial scheme under which the government bears part of forex risks."The announcement by the RBI will help in part to augment the NRI dollar deposits. Currently, $15 billion is outstanding under the FCNR deposits, and we believe with this measure, an additional $5-10 billion could be raised," Morgan Stanley said.

Experts however believe that the roll back of the July 15 tightening measures by the RBI would be possible only on two counts, if the Fed defers tapering or the markets decide that the tapering is priced in.According to BofA-ML, the RBI would roll back the July 15 tightening in his first policy on September 20, "not unless the Fed defers tapering or the markets decide that tapering is priced in".

"We would otherwise expect the RBI to unwind the July 15 tightening only in end-October or December after sufficient visibility that today's measures are working," the report added.

PTI