27 july 2026 Punjab Khabarnama Bureau : The Reserve Bank of India (RBI) considers the Indian rupee to be undervalued, while inflows through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits have reached around $32 billion, highlighting continued interest among non-resident Indians in India’s financial system.
The developments come amid ongoing efforts to strengthen foreign exchange inflows and maintain stability in the currency market.
Rupee Viewed as Undervalued
The RBI’s assessment that the rupee is undervalued suggests that the central bank believes the currency’s current market value does not fully reflect underlying economic fundamentals.
However, the rupee’s exchange rate is influenced by several factors, including global dollar movements, crude oil prices, foreign investment flows, interest-rate expectations and geopolitical developments.
FCNR(B) Deposits Become Key Source of Inflows
Inflows through FCNR(B) deposits have touched $32 billion, making them an important channel for foreign currency entering India’s banking system.
FCNR(B) accounts allow eligible non-resident Indians to hold deposits in designated foreign currencies. Unlike ordinary rupee deposits, these accounts help banks raise foreign currency resources while giving depositors exposure to foreign-currency savings.
Why These Inflows Matter
Strong FCNR(B) inflows can help improve the availability of foreign currency in India’s financial system.
They can also support the country’s external financing position and provide banks with an additional source of foreign currency funding.
At a time when global markets remain volatile, stable foreign exchange inflows can be particularly important for maintaining market confidence.
Rupee Faces Multiple External Pressures
Despite the RBI’s assessment, the rupee continues to be influenced by global economic conditions.
A stronger US dollar, elevated crude oil prices, capital outflows and geopolitical tensions can put pressure on the Indian currency. On the other hand, foreign investment inflows and stronger domestic economic fundamentals can provide support.
RBI Keeps Watch on Currency Markets
The central bank closely monitors movements in the foreign exchange market and intervenes when necessary to reduce excessive volatility.
The RBI’s approach is generally focused on maintaining orderly market conditions rather than targeting a specific exchange-rate level.
What the Developments Mean for the Economy
The combination of a rupee considered undervalued and strong FCNR(B) inflows reflects the complex dynamics of India’s currency market.
While currency valuation depends on a wide range of economic factors, sustained foreign exchange inflows can strengthen the country’s external position and provide additional stability.