RBI Governor Expects $80 Billion Inflow to Support Rupee

The Reserve Bank of India is tracking significant foreign-currency inflows following measures introduced on June 5 to stabilize the depreciating rupee. Governor Sanjay Malhotra expects total inflows to reach at least $80 billion. As of August 21, the central bank reported that Foreign Currency Non-Resident (FCNR) deposits reached $65.397 billion, contributing to a total of $72.85 billion when combined with external commercial borrowings and overseas foreign-currency debt.

To attract these dollars, the central bank subsidized hedging costs for banks and permitted lenders to use overseas borrowings for loans to non-resident Indians. Despite the influx of capital, the rupee has remained largely stagnant since early June, failing to replicate the sharp rally seen during similar interventions in 2013.

Governor Malhotra recently moved the closure of the FCNR swap window forward to August 31. He defended the decision as a data-driven calibration, noting a "diminishing marginal utility" of swapped dollars and rising sterilization costs. Internal projections suggest the program could create a financial burden for the central bank, with potential mark-to-market provisions reaching ₹30,000 crore in the first year and ₹1 lakh crore over five years, which may reduce dividends paid to the government.