RBI sees rupee as undervalued; FCNR(B) inflows cross $32 billion

📌 Summary:

• RBI Governor Sanjay Malhotra said the central bank's June policy measures to attract foreign capital drew a strong response — banks mobilised nearly $32 billion, largely via Foreign Currency Non-Resident (Bank) / FCNR(B) deposits
• Government securities (G-secs) attracted over $7 billion in foreign inflows since the June measures
• Malhotra dismissed fears that the inflows are merely a recycling of existing deposits; said RBI has adequate tools to manage the resulting liquidity
• Inflows have strengthened India's external position amid heightened geopolitical uncertainty and volatile global capital flows
• RBI views the rupee as currently undervalued

🎯 UPSC Relevance: GS3 (Indian Economy) — external sector management, exchange-rate policy, capital account and forex reserves; how the central bank uses NRI deposit schemes and debt-market access to shore up the balance of payments.

📝 Prelims Facts:

• FCNR(B) = Foreign Currency Non-Resident (Bank) deposit — held in foreign currency, so exchange-rate risk is borne by the bank, not the depositor
• RBI Governor: Sanjay Malhotra
• ~$32 billion mobilised (mostly FCNR-B); $7 billion+ into G-secs since June 2026 measures

🔑 Key Term: FCNR(B) deposit — a term deposit that NRIs can hold in specified foreign currencies with Indian banks, insulating the depositor from rupee depreciation and helping India attract stable foreign-currency inflows.