INDIA HEADED FOR HUGE SHORTAGE IN FOREX INFLOW AS NRI’s STAY AWAY DURING THE FESTIVE SEASON

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In India, the festive season is a respite of sorts for those of us in the Forex business. It starts around Dusshehra/ Diwali, runs through Christmas and New Year, and culminates at the end of January. It is the time when NRI’s visit their folks back home in India. This is a major source of forex inflow in India. Surprisingly, this year, the average NRI has stayed away, leading to a shortage of forex inflow. This in turn has led to forex being purchased at a rather high premium. The phenomenon is not just restricted to the US Dollar, but almost all currencies.

 However, this is not where it ends. November to March is also the “lean period” for the Indian traveller, with April to October being the “peak season”. With the fast approaching peak travel season (April), there are clear indications of a sort of crisis brewing because of this huge shortage of forex inflow. Indications are that a huge amount of forex imports will be resorted to, so as to meet the tremendous purchase pressure during the peak seasons.

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