RBI sees rupee as undervalued; FCNR(B) inflows cross $32 billion
RBI Governor Sanjay Malhotra reports that recent measures to attract foreign capital have successfully generated over $32 billion in FCNR(B) deposits. He maintains that the rupee is currently undervalued and that the central bank has sufficient tools to manage liquidity and currency volatility.
Why it matters
The influx of foreign capital is critical for stabilizing India's balance of payments and maintaining currency resilience amidst global economic uncertainty.
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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