New Delhi [India]: Foreign currency non-resident (FCNR) inflows have provided a significant cushion to the rupee and India's balance of payments (BoP), but a sustained improvement in external stability will eventually depend on the return of foreign institutional investor (FII) flows, Nuvama Research said in its latest economy report.
The report said FCNR inflows have helped boost India's foreign exchange reserves by around USD 100 billion, providing support to both the rupee and the BoP amid weak FII flows. The report described the situation as one where "FCNR deposits have cushioned BoP", but cautioned that the support may not be sufficient over the longer term.
