According to the most recent data compiled by the RBI, the amount of money from Indians working abroad that enters NRI bank deposits increased more than 4-fold to $2.7 billion in April and May of this year from $0.6 billion in the same period previous year, bolstering the nation’s foreign exchange reserves.
The entire amount of NRI deposits as of May was $154.72 billion. Non-resident external (NRE), non-resident ordinary (NRO), and foreign currency non-resident (FCNR) deposits are the three types of NRI deposit schemes.
These significant foreign exchange inflows support the rupee as well. The RBI research indicates that out of all the major currencies, the rupee has shown to be the most stable.
In the week that concluded on July 5, India’s total foreign exchange reserves increased to a record high of $657.16 billion. This illustrates the sound foundations of the economy and provides the RBI with additional leeway to stabilize the rupee in the event of volatility.
In order to stop the rupee from plunging into free collapse, the RBI can interfere in the spot and forward currency markets by releasing more dollars when the forex kitty is strong.
On the other hand, a diminishing foreign exchange reserves lessen the room for the RBI to operate in the market to support the rupee.
The increase in deposits coincides with India’s exports reaching $200 billion in the first quarter of 2024–2025.
When the monthly trade statistics were released this week, Commerce Secretary Sunil Barthwal stated, “If this trend continues, we expect this fiscal year’s exports to cross $800 billion.”
