India RBI measures draw $40.81 billion to support rupee

Most inflows came through Foreign Currency Non-Resident deposits, while demand has held up into a second month and the window for expanded government securities access runs until Sept. 30.

Summary

Reserve Bank of India measures introduced in early June to steady the rupee and attract foreign currency have brought in about $40.81 billion by Aug. 1, with Foreign Currency Non-Resident deposits contributing $36.7 billion, or about 90% of the total. External Commercial Borrowings added $1.5 billion and Overseas Foreign Currency Borrowings brought in $2.57 billion. Inflows had already crossed $20 billion by around July 20, indicating demand continued beyond an initial surge. The RBI launched the package between June 5 and June 8, combining zero-cost hedging for FCNR(B) deposits with expanded access to long-dated government securities through Sept. 30, 2026, while keeping the repo rate unchanged at 5.25% in June. SBI Economic Research projects total inflows could eventually reach $80 billion to $85 billion, including $65 billion to $70 billion from FCNR(B) deposits alone.

Terms & Concepts
  • Foreign Currency Non-Resident deposits: Foreign-currency bank deposits held in India by non-resident Indians.
  • hedging: Protection against losses from exchange-rate moves or other market fluctuations.
  • External Commercial Borrowings: Loans raised overseas by eligible domestic companies or institutions.