Where has India’s $73 billion gone? Inside the RBI’s great dollar haul

India's central bank, the RBI, has collected a significant amount of foreign currency, approximately $73 billion, over the past 11 weeks. This influx of funds is largely due to deposits from foreign banks, known as FCNR(B) deposits. Despite these substantial inflows, the value of the rupee remains relatively low, trading near ₹95-96 per dollar. This situation suggests that the RBI is using the foreign currency to boost its foreign-exchange reserves, rather than intervening in the currency market to drive up the value of the rupee.

Why it matters

India's central bank has accumulated a large amount of foreign currency, but the rupee's value remains volatile. This suggests that the bank's efforts to stabilize the currency may not be effective yet.

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