With the rupee slipping past 95 per dollar and West Asian tensions keeping risk elevated, India is weighing a return to NRI-focused dollar deposit schemes. The idea echoes 2000 and 2013, when incentives helped mobilise foreign currency and stabilise sentiment. But today’s backdrop is tougher: US rates are around 3.5%, making attractive coupons costlier. Estimates suggest a 3-year deposit rate of 6.0–6.25% may be needed, with funding support of 2.75–3.0%, potentially larger than earlier programmes.
The Reserve Bank of India is reportedly exploring a new route to strengthen the rupee by allowing state run banks to issue foreign currency bonds. The idea aims to draw fresh capital inflows and could use instruments with roughly five year maturities. While still early, it revives a strategy last used decades ago.
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The rupee dipped as tensions between the US and Iran escalated, sending oil prices higher and weighing on Indian stocks and bonds. Regional markets also turned cautious with renewed fighting that threatens a fragile Middle East ceasefire. Higher energy costs alongside weak capital inflows are continuing to pressure the currency.
India’s real estate sector saw capital inflows jump 72% to a record $5.1 billion in January to March, according to CBRE. Real estate developers accounted for roughly 42% of the inflows, while REITs followed closely at about 40%, with REIT investments exceeding $2 billion—highlighting strong investor appetite.
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