The Reserve Bank of India (RBI) has highlighted a decline in foreign direct investment (FDI) and record sales in the foreign exchange market to manage rupee volatility, according to its latest monthly bulletin.
Net FDI into India dropped significantly to $0.5 billion during April–November 2024, compared to $8.5 billion in the same period in 2023, as reported by Business Standard.
The decline reflects increased repatriation by foreign investors and higher overseas investments by Indian firms.
While gross inward FDI during the period rose to $55.6 billion from $47.2 billion a year earlier, disinvestment by direct investors surged to $39.6 billion, up from $29.7 billion in April–November 2023.
Outward FDI also saw a sharp rise, climbing to $15.5 billion from $8.9 billion in the corresponding period last year.
In a related development, foreign inflows into Indian government bonds over the next two-and-a-half months are expected to fall short of projections, Reuters had earlier reported.
Investors attribute this to the rupee repeatedly hitting all-time lows and US Treasury yields remaining at multi-month highs.
Meanwhile, the RBI reported record interventions in the foreign exchange market, selling $20.2 billion in November 2024 to stabilize the rupee against the dollar, reported Business Standard.
This pushed its net short position in the forward market to $58.9 billion by the end of November, up from $49.18 billion at the end of October.
These measures underscore the central bank’s efforts to address challenges posed by currency volatility and shifting global financial conditions.
Net FDI into India dropped significantly to $0.5 billion during April–November 2024, compared to $8.5 billion in the same period in 2023, as reported by Business Standard.
The decline reflects increased repatriation by foreign investors and higher overseas investments by Indian firms.
While gross inward FDI during the period rose to $55.6 billion from $47.2 billion a year earlier, disinvestment by direct investors surged to $39.6 billion, up from $29.7 billion in April–November 2023.
Outward FDI also saw a sharp rise, climbing to $15.5 billion from $8.9 billion in the corresponding period last year.
In a related development, foreign inflows into Indian government bonds over the next two-and-a-half months are expected to fall short of projections, Reuters had earlier reported.
Investors attribute this to the rupee repeatedly hitting all-time lows and US Treasury yields remaining at multi-month highs.
Meanwhile, the RBI reported record interventions in the foreign exchange market, selling $20.2 billion in November 2024 to stabilize the rupee against the dollar, reported Business Standard.
This pushed its net short position in the forward market to $58.9 billion by the end of November, up from $49.18 billion at the end of October.
These measures underscore the central bank’s efforts to address challenges posed by currency volatility and shifting global financial conditions.
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