Reserve Bank of India's net US dollar short position rose to $136.8 billion in
July, an increase of $33.5 billion, driven largely by growth in contracts longer
than one year, which increased from $64.2 billion to $91.5 billion. The central
bank absorbed $72.8 billion through foreign-exchange schemes, including a
special deposit plan for overseas Indians. While these inflows bolster FX
reserves, they create future dollar liabilities when three- to five-year
deposits mature and must be repaid.
