RBI measures will help spur overseas fund inflows: Seth

July 08, 2022 12:00 am | Updated 05:44 am IST - New Delhi

Changes transitory, for a short period, says DEA Secretary

Ajay SethManvender Vashist

Ajay SethManvender Vashist

Economic Affairs Secretary Ajay Seth on Thursday said the measures taken by the Reserve Bank of India (RBI) would increase inflows of overseas funds and help strengthen the rupee against the U.S. dollar.

The RBI had on Wednesday raised the overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds as it announced a slew of measures to boost foreign exchange inflows.

Mr. Seth said RBI’s measures were transitory and for a short duration, and would help boost foreign currency flows into the country.

The RBI had on Wednesday raised the External Commercial Borrowing limit under the automatic route from $750 million per financial year to $1.5 billion and eased norms for foreign portfolio investments in the debt market. Mr. Seth also expressed hope that the global challenges would subside in the short term.

The central bank had said all capital flows barring portfolio investments remained stable and an adequate level of reserves provided a buffer against external shocks.

Since the war in Ukraine broke out in late February, the RBI has dipped into its foreign exchange reserves to shield the rupee from steep depreciation.

The rupee has depreciated 4.1% against the U.S. dollar during the current financial year up to July 5. However, the dip is modest relative to other emerging markets and even major advanced economies.

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