RBI opens swap facility to aid export credit

Police guard the Reserve Bank of India building prior to the presentation of India's credit policy in Bombay April 29,2003.

MUMBAI (Reuters) - The Reserve Bank of India (RBI) has opened a special window to provide exporters with dollar credit by allowing banks to borrow the greenback from the central bank under a swap facility.

Banks will buy dollars from the RBI for tenures of 3 or 6 months, up to a combined total of $6.5 billion, with each having specific limit of how much it can borrow at a rate decided by the central bank.

This move aims to arrest a depreciation in the rupee, though traders do not expect a large amount of dollar inflow in the market immediately as there will be limits for each bank.

The rupee fell to lifetime low of 57.32 per dollar in late June on persistent concerns about the country's current account and fiscal deficits. However, the rupee has recovered to some extent since mid-September with the government pushing through ambitious reforms in retail and aviation.

The swap facility will be available to banks from January 21 till June 28, the RBI said.

(Reporting by Shamik Paul; Editing by Toby Chopra)