The Indian rupee (INR) has faced significant volatility in recent years, leading to a decline in its value against major currencies. In July 2013, the Reserve Bank of India (RBI) introduced measures to stabilize the currency, but these were deemed ineffective at the time. However, there may be new steps revealed soon to support the INR. One surprise could be if the central bank offers a Foreign Currency Non-Residential Bond (FCNR-B) deposit scheme, also known as an ‘NRI bond’, to encourage inflows and strengthen the INR.

The RBI has been actively monitoring the situation and taking steps to stabilize the currency. In July 2013, it introduced a swap facility for banks to help them manage their dollar assets and liabilities. However, this measure was deemed ineffective at the time, as the INR continued to depreciate against the US dollar. Since then, the RBI has taken several other measures, including increasing interest rates, selling dollars from its reserves, and imposing capital controls to limit outflows of foreign currency.

Despite these efforts, the INR continues to face challenges. The country’s current account deficit widened in 2013, and the RBI has faced criticism for not doing enough to support the currency. In response, the central bank may introduce a new deposit scheme aimed at attracting foreign investment and strengthening the INR.

One possible option could be an FCNR-B deposit scheme, which would allow non-resident Indians (NRIs) and foreign investors to invest in Indian rupees. This would provide a stable source of funding for the RBI and help stabilize the currency. The RBI could also offer attractive interest rates on these deposits to encourage more investment.

While an FCNR-B deposit scheme may be seen as a surprise, it is not entirely unprecedented. In 2013, the RBI introduced a similar scheme called the ‘NRI bond’, which was well received by foreign investors. The success of this scheme could provide a model for future deposit schemes aimed at supporting the INR.