RBI Forex Inflows Surge as Companies Prepare Price Hikes

The Reserve Bank of India's foreign currency non-resident and other forex schemes have attracted significant capital inflows totaling $40.81 billion as of July 31, 2026. This figure includes $36.7 billion from FCNR deposits, $1.5 billion from swap facilities for External Commercial Borrowings, and $2.57 billion through Overseas Foreign Currency Borrowings. SBI Economic Research anticipates total inflows from both schemes to reach up to $85 billion as the central bank shores up foreign exchange reserves.

Meanwhile, Indian companies are preparing for a new round of price hikes on various everyday products including toothpaste, tires, and paint ahead of the festival season running from August to November. This marks the second consecutive quarter for such increases, driven by rising commodity costs exacerbated by the prolonged Middle East conflict. Consumer prices surpassed the Reserve Bank of India's 4% target in June due to climbing food and fuel costs.

Although inflation remains within the central bank's tolerance band of 2% to 6%, price pressures are expected to intensify as companies pass on higher costs. Havells India Ltd. has already increased prices by up to 8%, and Tata Consumer Products Ltd.'s salt prices rose by about 7%. The Reserve Bank of India projects inflation to average 5.1% in the fiscal year ending March 2027, placing added focus on domestic monetary policy.