InvestorQ : Is it true that the RBI is allowing the rupee to appreciate in the last few weeks?
NISHA Nayak made post

Is it true that the RBI is allowing the rupee to appreciate in the last few weeks?

Answer
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Priyanka N answered.
4 weeks ago


In the last few weeks, there seems to be a conscious decision by the RBI to let the rupee strengthen by intervening less for buying dollars. Normally, the RBI gets touchy about letting the rupee appreciate as it weakens the exports. It has some genuine reasons for the same.

A strong rupee at this point will help keep the import bill under control. It is also likely to give confidence to portfolio investors to invest in India. Hence there is a genuine story for the RBI to allow the rupee to strengthen.

But the real story could be the FDI and the Atma Nirbhar Plan. It is a two way street. For FDI to come into India, the rupee needs to be strong. However, once the FDI starts coming in then the rupee is automatically going to see strength.

To encourage the Make in India push, the RBI has to make a start by keeping the rupee strong. That would help position India in the global supply chain. The result could be massive FDI influx into India, adding automatic strength to the rupee in the process.