Top News

• Foreign exchange inflows have helped the RBI to manage the rupee

• Last month, the rupee was the second best performing currency

• On Thursday, the rupee appreciated by 47 paise against the dollar

• The rupee is trading at 94.26 against the dollar

• Will the rupee continue to appreciate against the dollar in the coming days?

RBI Scheme: The Indian rupee has made a strong comeback in the global forex market and the interbank forex market. During early trade, the rupee gained 47 paise to 94.26 against the US dollar. This is mainly due to RBI's FCNR (B) scheme, which has brought more dollars into India than expected.

Apart from this, the decline in the global dollar index, stability in international crude oil prices and fresh capital inflows from foreign institutional investors (FIIs) into the Indian stock market. Indian currency Significant support has been obtained. This improvement against the backdrop of global economic volatility and export-import pressures reflects investor confidence in the strength and financial stability of the country's domestic economy. Let's take a look at this appreciation of the rupee against the dollar and its expected appreciation in the coming days.

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A strong rise against the dollar

The rupee gained 47 paise to 94.26 against the US dollar in early trade on Thursday, buoyed by higher-than-expected FCNR (B) deposit collections. Foreign exchange traders said the rupee's move was a reflection of strong fundamentals and RBI's aggressive intervention, which mitigated the negative impact of higher crude oil prices and global income. In the interbank foreign exchange market, the rupee opened at 94.30 against the US dollar, then gained 47 paise to settle at 94.26, up 47 paise from its previous close. On Wednesday, the rupee gained 22 paise to close at 94.73.

Why this rise in the rupee?

• India raised a record $127.23 billion through foreign exchange deposits under a special program by the central bank aimed at boosting the country's foreign exchange liquidity.
• Meanwhile, the dollar index, which measures the greenback's strength against a group of six currencies, was trading 0.16 percent lower at 99.43, on demand for safe-haven investments amid rising US-Iran tensions.
• Global oil benchmark Brent crude futures were down 0.16 percent at US$95.48 a barrel on rising US-Iran tensions and fears of disruptions to oil supplies through the Strait of Hormuz.
• On domestic bourses, the Sensex rose 221.17 points to 76,791.52, while the Nifty rose 59.55 points to 23,974 in early trade.
• According to exchange data, foreign institutional investors bought equities worth Rs 6,688.37 crore on a net basis on Wednesday.

Greater influence of FCNRB

IFA Global said in a research report that while this gives the RBI more scope to protect the rupee, the excess liquidity in the banking system will increase to around Rs 10 lakh crore as banks swap deposits with the RBI, creating a major bottleneck.

By Reserve Bank of India Foreign currency non-resident (bank), or FCNR(B), deposits have seen an inflow of US$127.226 billion as of August 31, it said on Wednesday. Including overseas foreign currency loans (OFCBs) and external commercial loans (ECBs), the total inflow under these measures has reached US$ 136.377 billion.

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