NRIWallah team
Updated
September 2026
· 4 min read
An FCNR(B) deposit is a fixed deposit with an Indian bank held in a foreign currency, with interest that is tax-free in India while you are an NRI and money that is fully repatriable. Banks offer several currencies, but the rates differ, and the best choice depends on the currency you earn and will spend.
From June to August 2026 the gap was unusually wide. An RBI swap facility let banks pay around 6% or more on three- to five-year US dollar deposits, and banks advertised that rate to NRIs everywhere. The facility closed on 31 August 2026, but the question it raised remains: is it worth converting your own currency to earn a higher rate in another?
Rates by currency, August 2026
| Currency | Home policy rate | FCNR(B), same currency, 3-5 years | FCNR(B) converted to USD | Exchange regime |
|---|
| USD | ~3.63% | 6.25% | — | Reserve currency |
| AED | 3.65% | rarely offered | 6.25% | Pegged since 1997 |
| SAR | 3.75-4.25% | rarely offered | 6.25% | Pegged since 1986 |
| GBP | 3.75% | 3.00-4.00% | 6.25% | Floating |
| EUR | 2.25% | 1.65-2.00% | 6.25% | Floating |
| AUD | 4.35% | 3.60-4.00% | 6.25% | Floating |
| CAD | 2.25% | 2.25-2.50% | 6.25% | Floating |
| JPY | 1.00% | 0.10-0.20% | 6.25% | Floating |
| SGD | ~1.20% | ~0.78-0.80% | 6.25% | Managed against a basket |
Representative figures from Indian bank FCNR(B) rate cards in August 2026, while the swap window was open. The USD column no longer applies to new deposits; check current rates on our FD rate comparison.
In most of these currencies the same-currency FCNR rate was below the depositor’s own home policy rate. The higher figures came only from converting into dollars.
Why the biggest gaps come with the most risk
When one currency’s interest rates stay well below another’s, exchange rates tend to make up some of the difference over time, a relationship known as interest rate parity. A large rate gap and a larger currency risk usually come together.
The yen shows this. Years of near-zero rates made it a favourite currency to borrow in, and it weakened from around 100-110 to the dollar for much of the 2010s to well above 150. It has also moved suddenly: in August 2024, the unwinding of trades funded in yen helped set off a sharp fall in global shares within days. Yen and Singapore dollar depositors saw the largest converted gaps, and carried the most currency risk to get them.
Pegged currencies
For dirham and riyal earners, converting to dollars carries little currency risk, because both are pegged to the dollar and local rates follow US rates. Any gap between a dollar FCNR rate and what dirhams or riyals earn at home is mostly a rate gain while the peg holds, subject to the small risk of a change to the peg.
The Singapore dollar sits between the two. It is not pegged, but the Monetary Authority of Singapore manages it on a stable path against a basket of currencies, and some of that stability is reflected in its low interest rates.
Floating currencies
For pounds, euros, Australian and Canadian dollars there is no anchor. Over a three- to five-year deposit these currencies can move against the dollar by far more than the rate gap, so the exchange rate at maturity, not the rate at the start, usually decides whether converting paid off.
Choosing a currency
- Hold the currency you will spend. If you will need pounds in five years, a pound FCNR deposit avoids exchange risk, even at a lower rate.
- Dirham and riyal earners can hold dollars with little extra risk.
- Floating-currency earners converting to dollars are taking a currency position as well as earning a rate. Decide whether you want that position.
- Tax where you live applies whatever the currency: the interest is tax-free in India but usually taxable in the UK, US, Canada and Australia.
NRIWallah does not provide financial advice. Home policy rates are central bank rates, not the rate any individual would be offered. Figures are as of August 2026; confirm current terms with your bank and take independent advice for your circumstances.
