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RBI takes steps to attract Foreign Investments, Bolster Rupee

by Rishika Choudhury

Date & Time: Jul 07, 2022 10:00 PM

Read Time: 1 minute

In response to rising inflation in the country, the Reserve Bank of India (RBI) announced a slew of measures on July 6 to support the rupee and attract foreign investment. Relaxation of the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on incremental FCNR(B) and NRE term deposits, easing rules for FPIs, and raising limits on external borrowings are among the major measures.

In the recent past, the Indian rupee was witnessing a downward trend and has touched its all-time lows multiple times. The rupee has also hit its record low of 79.38 to a dollar on July 5.

“The Reserve Bank has been closely and continuously monitoring the liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning," the central bank said on July 6.

Measures to increase forex

Other measures announced by the RBI to increase forex inflows include temporarily allowing banks to raise new FCNR(B) and NRE deposits without regard to existing interest rate regulations. Some of the other measures announced by the RBI also included allowing foreign investors to invest in short-term corporate debt and allowing the purchase of more government securities under the fully accessible route.

The announcement of measures came from the RBI just days after the central government raised import duties on gold, apart from increasing levies on exports of petrol and diesel in an attempt to control a fast-widening current account gap.

The RBI has also decided to increase the limit under the automatic route from $750 million or its equivalent per financial year to $1.5 billion.

Also Read: RBI launches next round of manufacturing company survey

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