According to the latest data from RBI, funds deposited by Indians working abroad have surged, with NRI deposits in banks jumping over four-fold to $2.7 billion in April-May this year from $0.6 billion in the same period last year. This has boosted foreign exchange reserves of the country. Now, the total NRI deposits stand at $154.72 billion as of May, which includes foreign currency non-resident (FCNR) deposits, non-resident external (NRE) deposits and non-resident ordinary (NRO) deposits.
These large infusions of foreign exchange have also brought strength to the rupee. The RBI's report says that the rupee is the most stable major currency at present.
Foreign exchange reserves of India touched a record $657.16 billion as of the week ended July 5, underlining strong fundamentals of the economy and giving Reserve Bank ample capacity to intervene and stabilise the rupee during bouts of volatility.
A fat forex reserve will enable the RBI to undertake market interventions, selling more dollars to prevent the rupee from depreciating sharply. On the other hand, a lower forex reserve will tie the hands of RBI from supporting the rupee.
This spike in inflows also coincides with India's overall exports breaching $200 billion in Q1 of 2024-25. "If this momentum continues, we expect the current financial year's exports to cross $800 billion", Commerce Secretary Sunil Barthwal said while releasing the latest trade figures last week.
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