$73 BILLION LANDS IN INDIA IN 11 WEEKS

🔴 $73 billion arrived in India in 11 weeks, and most of it came from Indians living abroad.

CNBC reports that New Delhi's special scheme has pulled in $73 billion of inflows, with more than $65 billion of it landing in Foreign Currency Non-Resident bank deposits. The finance ministry said Monday it is one of India's largest and fastest foreign-currency mobilization exercises.

The Reserve Bank of India started offering incentives in June on non-resident foreign currency deposits, overseas foreign currency borrowings and external commercial borrowings. A comparable push in 2013 raised $26 billion over three months.

Why the urgency. India's trade deficit widened to $49.3 billion between April and July, up from $32.3 billion a year earlier, as energy imports rose nearly 22%. Energy is more than a quarter of what the country buys.

At the same time foreign investors have been leaving equities. They sold a record $12.7 billion in March and $24.5 billion so far this year, ahead of the $18.9 billion sold last year. The rupee has weakened 6.5% against the dollar since the start of the year, among the worst in Asia.

IDFC First Bank chief economist Gaura Sengupta told CNBC the inflows give the RBI headroom to intervene, minimizing volatility rather than steering the currency. Her firm sees the rupee near 96.50 per dollar by March 2027. It traded at 95.7 on Tuesday.

The catch is the calendar. The incentives close Aug. 31. Nomura expects deposits to approach $80 billion, Jefferies says the combined measures could raise up to $100 billion. Citi forecasts a $53 billion balance of payments surplus for the year to March 2027, down from $60 billion, and says after August the picture depends on oil and investment flows.

Once the scheme ends, does the rupee hold?

#India #rupee #markets #macro #causeanuproar