&w=1200&q=75)
RBI Initiatives Expected to Attract $40-75 Billion and Support Rupee Strength
RBI measures to attract $40-75 bn, boost rupee: SBI, Kotak reports
Asianet Newsable
Image: Asianet Newsable
The Reserve Bank of India has introduced measures to shift the narrative around the rupee from depreciation to potential capital inflows. SBI forecasts $40 billion in inflows, while Kotak estimates up to $75 billion, as the MPC maintains a repo rate of 5.25% amid rising inflation concerns.
- 01SBI projects capital inflows of at least $40 billion, while Kotak estimates up to $75 billion, potentially stabilizing the rupee at 92-93 levels.
- 02The Monetary Policy Committee (MPC) held the repo rate steady at 5.25% and revised GDP growth for FY27 down to 6.6% due to global demand issues.
- 03RBI's new measures include expanding the Fully Accessible Route for government securities and tax exemptions for foreign portfolio investors, enhancing India's appeal for global bond index inclusion.
- 04RBI is covering hedging costs for fresh foreign currency deposits, which may lead banks to offer competitive rates, similar to those seen in 2013.
- 05Immediate market reactions included a 50 paise appreciation of the rupee and a decrease in government and corporate bond yields.
Advertisement
In-Article Ad
Following the recent Monetary Policy Committee meeting, the Reserve Bank of India (RBI) has implemented measures aimed at reversing the rupee's depreciation narrative by attracting significant capital inflows. SBI anticipates at least $40 billion in inflows, while Kotak Securities believes the total could reach $50-75 billion. The MPC maintained the repo rate at 5.25%, citing concerns over rising inflation and a downward revision of GDP growth to 6.6% for FY27 due to weak global demand and supply chain disruptions. To bolster capital inflows, RBI expanded the Fully Accessible Route for government securities and introduced tax exemptions for foreign portfolio investors, potentially enhancing India's chances for inclusion in global bond indices. The RBI is also covering hedging costs for new foreign currency deposits, which may lead to banks offering competitive rates. Following these announcements, the rupee appreciated by 50 paise, and yields on government securities declined. Analysts expect the RBI to pause on rate hikes in August, although some predict a potential increase of 50 basis points in FY27 due to inflation concerns.
Advertisement
In-Article Ad
The RBI's measures are expected to stabilize the rupee and enhance liquidity in the banking system, benefiting investors and borrowers.
Advertisement
In-Article Ad
Reader Poll
Do you think the RBI's measures will successfully stabilize the rupee?
Connecting to poll...
More about Reserve Bank of India
India's RBI Plans to Introduce Polymer Currency Notes
Pratidin Tv - Breaking News & Latest Update • Jun 6, 2026
GIFT Nifty Drops 1.5% Amid US Market Crash: What Lies Ahead for Indian Stocks?
The Economic Times • Jun 6, 2026
RBI Gold Reserves Value Drops $2.19 Billion Amid Speculation of Sale
Business News India • Jun 6, 2026
Read the original article
Visit the source for the complete story.