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RBI

India's $32 Billion Forex Drive Yet to Deliver Stronger Rupee Support

about 2 months ago · Lumic

Indian Rupee (INR) symbol with rising dollar bills in the background, symbolizing forex inflows and currency market.
Lumic
about 2 months ago
India's $32 Billion Forex Drive Yet to Deliver Stronger Rupee Support
KEY POINTS
India has attracted $32 billion under RBI forex measures to strengthen external finances.
Inflows have improved liquidity buffers but have not meaningfully strengthened the rupee.
RBI says government cash balances and interventions have tempered the currency impact.
LUMIC INSIGHT
Currency strength depends on more than foreign inflows.
Business Standard·about 2 months ago

This 'Insights' piece delves into India's recent $32 billion foreign exchange (forex) initiative spearheaded by the RBI. While these measures aimed to bolster the rupee and strengthen the country's external finances, the currency's performance has not seen a significant uptick. We explore how, despite improving liquidity buffers through measures like FCNR deposits and dollar inflows, the INR hasn't gained the expected strength. The Reserve Bank of India points to factors such as government cash balances and its own market interventions as reasons tempering the direct impact of these forex reserves. Understand the nuances of India's currency dynamics and balance of payments in this detailed analysis.

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