RBI further liberalises norms to boost inflows of foreign exchange
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Amid the rupee falling against the US dollar, the Reserve Bank of India (RBI) has further liberalised norms to boost inflows of foreign exchange including doubling the borrowing limit under the External Commercial Borrowing (ECB) route. The central bank said it has been closely and continuously monitoring the liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning.
The measures taken by the central bank comes in the backdrop of rupee depreciating by 4.1 per cent against the US dollar during the current financial year so far (up to July 5) amid the ongoing geopolitical tensions.
In order to further diversify and expand the sources of forex funding so as to mitigate volatility and dampen global spillovers, the central bank has decided to undertake five measures to enhance forex inflows while ensuring overall macroeconomic and financial stability. The measures include easing norms for FPI investment in debt market, and increasing the ECB limit under the automatic route from $750 million or its equivalent per financial year to $1.5 billion.
