Overseas Indians have started flocking India markets with a weak rupee and high interest rates making them so attractive amid rising global uncertainties following the downgrade of US sovereign debt rating as the debt concerns in Europe that they have brought in highest ever amount in a single month .
Aggregate inflows under various NRI deposits schemes touched $ 1.7 billion in November, the highest ever in a single month. The data reflects the period before the Reserve Bank freed up interest rates in December, following which banks have raised the rates sharply bringing them on par with local rates.
NRIs have brought in a total of $ 6.4 billion so far this fiscal between April and November, compared to a mere $ 2.2 billion in the year ago period. However, a bulk of the inflows-$5.1 billion- have come in only after August co-inciding with the deepening of the European debt crisis and the US sovereign downgrade.
NRI deposits in India inflows are under three categories, foreign currency non-resident (banks) or FCNR (B), non-resident-ordinary or NRO and non-resident external, rupee account or NRE (RA). Each one of them have distinct features.
For instance, in case of NRE (RA), the foreign exchange risk is borne by the depositor and hence tends to gain at the time of conversion, when the rupee is appreciating through the tenor of the deposits. While these two are repatriable, proceeds in the NRO accounts are meant only for the local use.
Besides, with the prospects of rupee strengthening further, the returns on NRE deposits could be even more attractive. Notably, it is the NRE deposits that has been the favorite among the diaspora with $ 3.4 billion coming in between August and November. ' NRIs often tend to take a long-term view that the rupee would strengthen further whenever the rupee has actually weakened. As a result, inflows tend to be higher when rupee is weak.' said a senior official with a large public sector bank requesting anonymity.
The Reserve Bank of India sold a record $2.9 billion in the spot currency market to rein in the value of the rupee, according to the figures released by the Reserve Bank of India on Thursday.
The rupee, it may be recalled was seen slipping against the dollar at a very steep pace during the month, forcing the central bank to intervene in the currency market to prevent a steep slide. The central bank has been criticised from a section of the market for remaining on the sidelines for very long.
After a prolonged absence in the currency markets for almost a year, the central started selling in small chunks in September and October. Cumulatively in three months, it sold $ 4.7 billion between September and November'11.
Aggregate inflows under various NRI deposits schemes touched $ 1.7 billion in November, the highest ever in a single month. The data reflects the period before the Reserve Bank freed up interest rates in December, following which banks have raised the rates sharply bringing them on par with local rates.
NRIs have brought in a total of $ 6.4 billion so far this fiscal between April and November, compared to a mere $ 2.2 billion in the year ago period. However, a bulk of the inflows-$5.1 billion- have come in only after August co-inciding with the deepening of the European debt crisis and the US sovereign downgrade.
NRI deposits in India inflows are under three categories, foreign currency non-resident (banks) or FCNR (B), non-resident-ordinary or NRO and non-resident external, rupee account or NRE (RA). Each one of them have distinct features.
For instance, in case of NRE (RA), the foreign exchange risk is borne by the depositor and hence tends to gain at the time of conversion, when the rupee is appreciating through the tenor of the deposits. While these two are repatriable, proceeds in the NRO accounts are meant only for the local use.
Besides, with the prospects of rupee strengthening further, the returns on NRE deposits could be even more attractive. Notably, it is the NRE deposits that has been the favorite among the diaspora with $ 3.4 billion coming in between August and November. ' NRIs often tend to take a long-term view that the rupee would strengthen further whenever the rupee has actually weakened. As a result, inflows tend to be higher when rupee is weak.' said a senior official with a large public sector bank requesting anonymity.
The Reserve Bank of India sold a record $2.9 billion in the spot currency market to rein in the value of the rupee, according to the figures released by the Reserve Bank of India on Thursday.
The rupee, it may be recalled was seen slipping against the dollar at a very steep pace during the month, forcing the central bank to intervene in the currency market to prevent a steep slide. The central bank has been criticised from a section of the market for remaining on the sidelines for very long.
After a prolonged absence in the currency markets for almost a year, the central started selling in small chunks in September and October. Cumulatively in three months, it sold $ 4.7 billion between September and November'11.