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RBI liberalises norms to boost forex inflows

The Reserve Bank of India (RBI) on Wednesday further liberalized rules to increase foreign exchange inflows, including doubling the borrowing limit under the ECB route in the fall of the rupee against the US dollar.

In a statement, the central bank said it was closely and continuously monitoring the liquidity situation in the forex market and had taken necessary steps in all its departments to reduce the narrowness of the dollar in order to ensure orderly market performance.

Amid ongoing geopolitical tensions, the measures taken by the central bank come in the wake of a 4.1 per cent devaluation of the rupee against the US dollar so far this fiscal year (as of July 5).

“To further diversify and expand the sources of foreign exchange funds to mitigate instability and reduce global spillovers,” the central bank said it had decided to take five steps to increase foreign exchange inflows while ensuring overall macroeconomic and financial stability.

These measures include simplifying the rules for FPI investments in the debt market, and raising the External Commercial Credit (ECB) limit under the automatic route from USD 750 million or its equivalent to USD 1.5 billion per fiscal year.

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