RBI sees rupee as undervalued; FCNR(B) inflows cross $32 billion
RBI Governor Sanjay Malhotra stated that recent measures to attract foreign capital have successfully mobilized over $32 billion, primarily through FCNR(B) deposits. He dismissed concerns regarding currency depreciation, arguing that the rupee is currently undervalued and that the central bank has sufficient tools to manage liquidity and volatility.
Why it matters
This provides insight into India's economic strategy for maintaining currency stability and balance of payments amidst global financial volatility.
The Reserve Bank of India’s (RBI) recent measures to attract foreign capital have garnered strong investor response, with banks mobilising nearly $32 billion, largely through Foreign Currency Non-Resident (Bank) or FCNR(B) deposits, while government securities have attracted more than $7 billion in foreign inflows since the June policy measures, RBI Governor Sanjay Malhotra has said.
In an interview with The Hindu BusinessLine , Mr. Malhotra dismissed concerns that the inflows merely represent a recycling of existing deposits. He added that the RBI has adequate tools to manage any resulting liquidity. The inflows have strengthened India’s external position amid heightened geopolitical uncertainty and volatile global capital flows, he said.
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