Modi govt mulls tapping NRIs to prop up beleaguered rupee
mumbai — Prime Minister Narendra Modi’s government is considering tapping Indians living overseas to lure foreign exchange flows and prop up a sagging rupee, according to people with knowledge of the matter.
Officials from the finance ministry and the central bank are discussing a plan to raise money from non-resident Indians, the people said asking not to be identified as the information is not public. An announcement regarding the method may come as early as this month, they said, without providing further details.
India is seeking to boost flows to support its currency that has declined more than 14 per cent against the dollar this year making it Asia’s worst performer. The risk of a widening current-account deficit left the rupee vulnerable to the rout in emerging markets amid surging oil prices, trade tensions and rising US interest rates. Dollarrupee contracts maturing in one month reversed loses to gain 0.3 per cent after the report.
“This measure if implemented has the potential to change the rupee’s trajectory,” said Anindya Banerjee, a foreign-exchange analyst at Kotak Securities Ltd in Mumbai. “This also shows the policymakers’ seriousness in making sure that this situation doesn’t get out hand.”
Finance ministry spokesman D.S. Malik didn’t answer two calls to his phone and a spokesman for RBI didn’t respond to an email. In the past, the government has re-
sorted to bond sales and dollar deposits to overseas Indians to attract foreign funds and ward off pressure on the rupee. RBI had put in place a so-called foreign currency nonresident
bank deposits plan in 2013 to support the rupee during taper tantrum. Overseas investors have pulled a net $11 billion from Indian stocks and bonds this year
amid an emerging-market sell off, adding to worries that India will struggle to bridge its ballooning current-account deficit. —