FCNR(B) accounts allow Non-Resident Indians to maintain fixed deposits in foreign currencies like the US Dollar. They offer tax-free returns and full repatriability, making them essential instruments for the RBI to manage forex reserves and ensure rupee stability.
Click to View MoreTo stabilize the rupee and bridge the balance of payments deficit, India has eliminated capital gains and withholding taxes on FII investments in government bonds via the Income Tax Amendment Ordinance 2026, boosting foreign debt inflows and lowering imported inflation.
Click to View MoreForex reserves buffer currency stability. While restricting imports conserves forex, it suppresses consumption and hampers growth. Sustainable management instead demands boosting domestic productivity and export competitiveness.
Click to View MoreRupee depreciation refers to the fall in the value of the Indian rupee against other currencies, primarily driven by market forces such as high import demand, capital outflows, and global dollar strength. While it poses challenges like higher import costs, inflation, and increased foreign debt burden, it can also boost exports, attract foreign investment, and increase remittance value. Institutional interventions by the RBI, Government, SEBI, and export agencies aim to manage volatility, maintain investor confidence, and strengthen long-term economic fundamentals, ensuring that currency movements reflect real economic strength rather than short-term pressures.
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