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The money from Indians working overseas that come into NRI deposits of banks surged more than 4-fold to $2.7 billion in April-May this year compared to $0.6 billion in the same period last year, strengthening the country’s foreign exchange reserves, the latest data compiled by the RBI showed. 

The total NRI deposits as of May have now gone up to $154.72 billion. The NRI deposit schemes include foreign currency non-resident (FCNR) deposits, non-resident external (NRE) deposits, and non-resident ordinary (NRO) deposits.

These large inflows of foreign exchange also help to prop up the rupee. According to the RBI report, the rupee has emerged as the most stable among major currencies.

India’s total foreign exchange reserves have jumped to a lifetime high of $657.16 billion during the week ended July 5. This reflects the strong fundamentals of the economy and gives the RBI more headroom to stabilise the rupee when it turns volatile.

A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.

Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.

The surge in deposits also comes at a time when India’s total exports in the first quarter of 2024-25 have crossed $200 billion.

“If this trend continues, we expect this fiscal year’s exports to cross $800 billion,” Commerce Secretary Sunil Barthwal said while releasing the monthly trade figures this week.