2 hrs ago
Rupee Hits Ten-Week High After Massive Dollar Inflows
The Indian rupee became stronger against the US dollar.
It rose to its best level since June 25.
A major reason was that a Reserve Bank of India plan brought many dollars into the country.
The plan attracted about $136.4 billion.
A weaker dollar and steady oil prices also helped.
More dollars could make it easier for banks to manage money during the festive season.
Experts think the rupee may strengthen further.
However, expensive oil, higher US interest-rate yields or geopolitical problems could weaken it again.
The Reserve Bank of India may now have more flexibility to manage the currency in both directions.
The rupee gained 0.51% to close at 94.48 per dollar, its strongest level since June 25.
The Reserve Bank of India’s special forex mobilisation scheme attracted about $136.4 billion, including $127 billion through FCNR(B) inflows.
A weaker US dollar and steady oil prices provided additional support to the Indian currency.
Analysts expect the rupee could strengthen toward 94.10–93.50 per dollar, though risks could push it back toward 96.
The inflows may improve system liquidity, support banks’ net interest margins and reduce pressure on domestic interest rates.
- Who
- The Indian rupee, the Reserve Bank of India, currency traders and analysts including Kunal Sodhani and Anil Bhansali.
- What
- The rupee recorded its largest one-day gain since July 27, closing at 94.48 per US dollar.
- Where
- Mumbai and the Indian foreign-exchange market.
- When
- Thursday; the article does not specify the calendar date.
- Why
- The gain was driven mainly by dollar inflows from the Reserve Bank of India’s special forex mobilisation scheme, along with a weaker US dollar and steady oil prices.
Key facts
- Closing exchange rate
- 94.48 Indian rupees per US dollar
- Daily appreciation
- 0.51%, the rupee’s largest single-day gain since July 27
- Special-scheme mobilisation
- About $136.4 billion
- FCNR(B) inflows
- About $127 billion
- Dollar index
- Fell to around 99.22 during the day
- Analysts’ near-term rupee forecast
- Potential appreciation toward 94.10–93.50 per dollar
- Main downside risk
- A return toward 96 per dollar if crude rises above $100 a barrel, US yields increase or geopolitical stress returns
Quotes
Kunal Sodhani
Head of treasury at Shinhan Bank
“The RBI’s strategy is likely to shift from simply defending the rupee against depreciation towards active two-way management: continue selling dollars on sharp USD/INR rallies, but use the abundant dollar supply to absorb dollars on deeper dips, rebuild reserves and manage the forward-book exposure. The key is that the RBI now has considerably more flexibility to resist both excessive depreciation and excessive appreciation.”
deccanchronicle.com
“Higher-than-expected FCNR(B) inflows now at $127 billion, taking total special-scheme forex mobilisation to about $136 billion materially strengthens the RBI’s hand.”
deccanchronicle.com
Sources
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