India Economy Thread

[NeptunesVortex]

India draws $136.38 billion in forex inflows, bolstering support for rupee

https://www.reuters.com/world/india/india-draws-13638-billion-forex-inflows-boosting-reserves-2026-09-02/

 

[hydrabadi_arab]

India has over 700 bn in foreign reserves and low domestic inflation. They could easily spend some dollars to support the currency if they wanted to. What they are doing is textbook currency manipulation to keep exports competitive in a tough global trade environment.

The cost of doing that is falling down global GDP rankings despite having a high GDP growth rate, but what really matters is whether nominal per capita income in the domestic currency is outpacing domestic inflation or not and India has kept inflation under control by fixing the price of gasoline and diesel.

India FX currency was on terminal decline defending rupee and had to introduce diaspora deposits offering 7.5% interest on USD. Temporary relief to falling rupee. They can't get out of this by spending FX as foreign investors withdraw at record pace, $45bn in 18 months.

Now local Indians are asked to not buy gold or take foreign trips. Meanwhile diaspora is given almost 8% interest on their USD deposits. Locals are barely given 4% in INR which is falling. Modi spend must of the time on foreign trips taking fake medals.

Giving even more reasons to take that trip abroad and never come back and buy gold.

 

[Owaiz]

India FX currency was on terminal decline defending rupee and had to introduce diaspora deposits offering 7.5% interest. Temporary relief to falling rupee. They can't get out of this by spending FX as foreign investors withdraw at record pace.

Most exporting nations prefer a weak currency. This has been the standard playbook of Japan, China and South Korea , all of which have undervalued currencies and are regularly accused of being currency manipulators by the US. Now India has also joined them and I guess it worked for them since they were able to maintain high GDP and export growth despite 50% tariffs by the US.

The one downside of a weak currency is importing inflation, but India controls the domestic price of gasoline, diesel and other essential commodities. In USD terms, India has actually experienced very high deflation since the price of fuel measured in USD has actually declined significantly at a time when the competitors have seen huge price increases, thus increasing export competitiveness. If Central bank reserves have risen significantly while the currency has depreciated, that is a tell-tale sign that it is deliberate trade policy and in, India's case, the low inflation rate despite the currency depreciation makes it clear that is what is happening.

 

[hydrabadi_arab]

Most exporting nations prefer a weak currency. This has been the standard playbook of Japan, China and South Korea , all of which have undervalued currencies and are regularly accused of being currency manipulators by the US. Now India has also joined them and I guess it worked for them since they were able to maintain high GDP and export growth despite 50% tariffs by the US.

The one downside of a weak currency is importing inflation, but India controls the domestic price of gasoline, diesel and other essential commodities. In USD terms, India has actually experienced very high deflation since the price of fuel measured in USD has actually declined significantly at a time when the competitors have seen huge price increases, thus increasing export competitiveness. If Central bank reserves have risen significantly while the currency has depreciated, that is a tell-tale sign that it is deliberate trade policy and in, India's case, the low inflation rate despite the currency depreciation makes it clear that is what is happening.

Tell me if India prefer weak currency then why offer this to diaspora. In desperate attempt to attract dollars to stabilise currency for short term. You are not making any sense.

 

[Owaiz]

Tell me if India prefer weak currency then why offer this to diaspora. In desperate attempt to attract dollars to stabilise currency for short term. You are not making any sense.

View attachment 213704

All countries borrow money for their funding needs. Deposits can be cheap compared to market borrowing and offer diversification. There can be many reasons for offering these as part of the government funding strategy.

If India wanted a stronger currency, why would the central bank be accumulating dollars and selling INR at a time when foreign portfolio investors are also selling rupees. Generally, when a central bank wants to strengthen its own currency, it sells foreign currency and reduces its reserves, not the other way round and India's central bank reserves are at record levels and far more than what they need as a buffer.

In any case, a weaker currency helps exports . Every country prefers it as long as inflation and inflation expectations stay under control. Even Trump lets that out sometime and hates other countries weakening their currencies, even though the US , as a reserve currency provider, has officially had a "strong dollar " stance. That is basic business sense of what provides competitive advantage.