New Delhi's bid to attract foreign funds through a special scheme has helped power $73 billion in inflows in the last 11 weeks, driven by the incentives offered to non-resident Indians for making foreign currency deposits in Indian banks.
The country's finance ministry has called the incentivized deposit scheme, also known as Foreign Currency Non-Resident (Bank) deposits, India's "largest and fastest foreign-currency mobilization exercises."
More than $65 billion of the inflows came to these bank deposits, India's finance ministry said Monday, and the deposits could rise to nearly $80 billion before the incentives end on Aug. 31, according to global brokerage Nomura.
In 2013, a similar move led to inflows of $26 billion over three months, according to the official release.
These inflows have "fortified" India's external buffers with "maximum cost-efficiency," the ministry said.
The U.S. dollar was on the defensive early on Wednesday after comments from Federal Reserve Chair Jerome Powell bolstered wagers on an interest rate cut this month.
New Delhi's bid to attract foreign funds through a special scheme has helped power $73 billion in inflows in the last 11 weeks, driven by the incentives offered to non-resident Indians for making foreign currency deposits in Indian banks.
The move aimed to shore up the Indian rupee, which remains weak amid a rising energy import bill and an exodus of foreign capital.
Despite the recent spike in energy prices, the rupee has been relatively stable, as these inflows have provided headroom for the Reserve Bank of India to intervene in the currency market, Gaura Sengupta, chief economist at India's IDFC First Bank, told CNBC.
The RBI is using these inflows to minimize the "volatility" but not to "influence the direction" of the local currency, she said, adding that her firm pegs the rupee to settle at around 96.50 per dollar by March 2027. It was trading at 95.7 on Tuesday.
The country's finance ministry has called the incentivized deposit scheme, also known as Foreign Currency Non-Resident (Bank) deposits, India's "largest and fastest foreign-currency mobilization exercises."
More than $65 billion of the inflows came to these bank deposits, India's finance ministry said Monday, and the deposits could rise to nearly $80 billion before the incentives end on Aug. 31, according to global brokerage Nomura.
In 2013, a similar move led to inflows of $26 billion over three months, according to the official release. These inflows have "fortified" India's external buffers with "maximum cost-efficiency," the ministry said.
