Our rupee will become stronger against the dollar! RBI made this ‘masterplan’ to revive Indian currency

The health of the Indian currency is not going well these days. The rupee is continuously falling against the dollar and now it has reached very close to the historical low of 97. It has a direct impact on the life of the common man in the form of inflation, because when the rupee becomes weak, every essential item coming from abroad starts becoming expensive. This continuously falling credibility of the rupee has drawn deep lines of concern on the forehead of the Reserve Bank of India (RBI). To bring the situation under control, the round of meetings within RBI has intensified.

RBI has full confidence in the strength of the economy

According to a news from Moneycontrol, top officials including RBI Governor Sanjay Malhotra have held several important internal meetings to stop the fall of the rupee. There is a clear concern among policy makers that the rupee is depreciating faster than expected. However, RBI clearly believes that the fundamentals of the Indian economy are still very strong and our banking system is completely safe. The real problem is that this strength of the economy is not currently reflected in the exchange rates of the foreign exchange market. Now the biggest priority of the central bank is to somehow prevent the rupee from falling further.

RBI’s ‘masterplan’ to accelerate rupee’s rise

RBI has an excellent action plan ready to strengthen the rupee and increase the inflow of foreign exchange. Let us understand how RBI can make the rupee appreciate.

1. Brahmastra of NRI Deposit Scheme: To increase the foreign exchange reserves, RBI can bring a very attractive deposit scheme for Non-Resident Indians (NRIs). India had taken a similar successful step during the ‘Taper Tantrum’ of 2013, when about 30 billion dollars came to India. This time RBI estimates that huge investment of up to 50 billion dollars can come into the country through the new scheme. When such a large amount of dollars will come to India, the supply of dollars in the market will increase and the rupee will automatically strengthen.
2. Bet on increase in interest rates: The six-member Monetary Policy Committee (MPC) meeting of RBI is going to be held on 3rd to 5th June. The benchmark rate is stable at 5.25% so far this year. If RBI increases interest rates, the returns on investing in India will increase. This will rapidly attract foreign investors towards Indian markets and the inflow of dollars will increase.
3. Issuance of Sovereign Dollar Bonds: RBI and the government together are also considering selling Sovereign Dollar Bonds to raise dollars from foreign markets. This is a very safe and effective way of raising foreign exchange directly from the international market, thereby providing immediate and strong backup to the rupee.
4. Dollar Swap Auction: To maintain liquidity in the banking system and to immediately strengthen the dollar reserves, RBI has announced a successful swap auction of 5 billion dollars on Wednesday itself. Experts believe that if needed, RBI can conduct more such auctions, so that stability is maintained in the market.

Foreign investors will return

It is true that the interest rate differential between America and India had come down to its lowest level in the last decade, due to which foreign investors withdrew some money (about $19 billion) from the market in the year 2026. But, experts believe that after the action of RBI, this difference will again be in favor of India. As soon as the Indian bond market starts giving more profits, foreign investors will return to the Indian market doubly fast.