Mumbai — The Indian rupee surged 67 paise to a two-month high against the U.S. dollar Thursday, posting its biggest single-day gain since June as foreign currency non-resident bank inflows exceeded market expectations.
The rupee opened at 94.30 against the dollar, compared with 94.97 at the previous close.
The sharp move followed the Reserve Bank of India’s announcement Wednesday that it had attracted $127.23 billion through FCNR-B deposits. Including external commercial borrowings and overseas foreign currency borrowings, total inflows reached $136.38 billion.
The strong response came after the central bank introduced a facility on June 8 aimed at drawing more foreign currency into the Indian banking system and strengthening the country’s external buffers.
Inflows accelerated sharply in August. By Aug. 21, banks had mobilized $65.4 billion through FCNR-B deposits, while combined inflows through FCNR-B deposits, external commercial borrowings and overseas foreign currency borrowings totaled about $73 billion. That figure climbed to $136.38 billion by the end of the month.
Given the strong response, the RBI moved up the closure of the FCNR-B deposit mobilization window to Aug. 31 from the previously scheduled Sept. 30 deadline. The swap facility for eligible deposits already mobilized will remain available through Sept. 11.
Currency market analysts said the rupee’s immediate trading range is expected to be between 94.10 and 95.50 against the dollar. A sustained move below 94.10 could push the currency toward 93.50.
Analysts also said the RBI’s stronger foreign exchange position gives it greater flexibility to rebuild reserves while limiting excessive weakness in the rupee.
However, elevated crude oil prices and rising global bond yields remain risks. Brent crude was trading near $95 a barrel amid ongoing geopolitical tensions. (Source: IANS)
