India's rupee stabilisation measures spur $7 bn FII inflows

The Indian government introduced a package of steps to attract foreign capital and curb rupee volatility, including tax exemptions for FIIs and FPIs on sovereign bonds, subsidised hedging costs for FCNR(B) deposits and discounted dollar‑swap facilities for PSU loans. Following the announcement, foreign institutional investors poured about $7 billion into Indian markets, according to an SBI Research report.

The rupee appreciated roughly 2.2% from its May low of 96.8 per U.S. dollar to the end of June. During the same two‑week period the Reserve Bank of India’s foreign‑exchange reserves rose by $4.4 billion. Commercial paper issuance surged to its highest level in 55 months and bank credit expanded to ₹5.6 lakh crore, up from ₹2.4 lakh crore a year earlier. SBI Research expects crude‑oil prices to average $80 a barrel or less, which could save India ₹30‑35 billion on import bills. Record domestic deposits of ₹7 lakh crore further improved liquidity conditions.