RBI Report Shows Currency in Circulation Growth Hits Five-Year High

Overview of Reserve Bank of India Findings

According to the Reserve Bank of India's (RBI) "State of the Economy" report authored by RBI staffers, growth in currency in circulation (CiC) reached a five-year high. The report attributes this increase largely to deposits mobilized under Foreign Currency Non-Resident (Bank), or FCNR(B), schemes, which contributed to a robust expansion in reserve money.

Key Figures and Data Points

Based on the latest data released in the report:

• Currency in circulation stood at ₹43.46 trillion as of October 15, marking a year-on-year growth rate of 13.5 per cent.
• Reserve money grew by 10.3 per cent year-on-year, reaching ₹53.24 trillion.
• CiC growth was recorded at 13.3 per cent during the fortnight ending September 30.
• Banks mobilized $133 billion in FCNR(B) deposits through a special dollar-rupee forex-swap facility introduced on June 8, which remained open until August 31.

Expert Analysis and Liquidity Outlook

Financial analysts note that as the central bank begins to absorb liquidity, reserve money growth is expected to moderate. Gaura Sen Gupta, chief economist at IDBI First Bank, stated that the pickup in reserve money reflects cumulative liquidity injections by the RBI since FY26, including net open-market-operation purchases and swap windows.

Experts project that liquidity will tighten further due to ongoing foreign exchange interventions and seasonal increases in currency demand during the festive period, which should help moderate reserve money growth.

Broader Economic Indicators

The RBI report also highlighted broader economic resilience:

• Indian high-frequency indicators demonstrated an ability to withstand global shocks.
• Domestic demand and the services sector continued to support gross domestic product growth despite India's status as a net energy importer.
• Retail inflation showed signs of broader generalization across commodities, suggesting potential adjustments in monetary policy.
• Strong FCNR(B) inflows, foreign direct investment, external commercial borrowings, and remittances strengthened foreign reserves, while robust export growth helped narrow the trade deficit in September.

How to Verify

Interested readers and financial researchers can verify these findings by accessing the official Reserve Bank of India website to read the complete "State of the Economy" report and associated monthly bulletins.