Rupee gains 47 paise as record FCNR inflows boost forex liquidity
Rupee gains 47 paise as record FCNR inflows boost forex liquidity
Key Highlights
- Rupee began Thursday on a strong note, gaining 47 paise to 94.26 against US dollar in early trade, as record foreign-currency deposit mobilisation bolstered the countryâs foreign-exchange liquidity.The currency opened at 94.30 at the interbank foreign exchange market before moving up to 94.26.
- It had closed at 94.73 on Wednesday, after gaining 22 paise.The strong move came after the Reserve Bank of India said foreign currency non-resident (Bank), or FCNR(B) deposits had brought in $127.226 billion as of August 31 under a special programme.Including overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB), the measures attracted total inflows of $136.377 billion.Forex traders said that rupee was being supported Record FCNR(B) inflows strengthen RBI's handThe record mobilisation through FCNR(B) deposits has also raised the amount of liquidity that could enter the banking system as banks swap the deposits with the RBI."This gives RBI a long rope in terms of defending rupee, it creates a huge sterilisation problem as banking system liquidity surplus will likely go to around Rs 10 lakh crore as banks swap the deposits with RBI,â IFA Global said in a research note.The FCNR(B) deposits were mobilised under the special central-bank programme aimed at bolstering India's foreign-exchange liquidity.Dollar, oil prices remain in focusThe dollar index was at 99.43, down 0.16 per cent.
- The index tracks the greenback against a basket of six major currencies.
The Indian rupee began Thursday with a bang, surging 47 paise to 94.26 against the US dollar in early trade, as record foreign-currency deposit mobilisation bolstered the country's foreign-exchange liquidity.
The currency opened at 94.30 at the interbank foreign exchange market before making a swift move up to 94.26, a gain of 47 paise from its previous close of 94.73 on Wednesday.
According reserve bank india, foreign
According to the Reserve Bank of India, foreign currency non-resident (Bank), or FCNR(B) deposits had brought in $127.226 billion as of August 31 under a special programme, attracting significant inflows.
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This was part of a broader effort 377 billion.
Forex traders attributed the rupee's strong move to record FCNR(B) inflows, which have strengthened the RBI's hand in defending the currency.
"This gives the RBI a long rope in terms of defending rupee," said IFA Global in a research note. "However, it also creates a huge sterilisation problem as the banking system's liquidity surplus will likely surge to around Rs 10 lakh crore when banks swap deposits with the RBI."
The record mobilisation through FCNR(B) deposits has raised concerns about the potential for excessive liquidity in the banking system.
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Despite these pressures, the rupee continued to strengthen in early trading, benefiting from inflows and RBI intervention.
Domestic equities also opened higher on Thursday, with the BSE Sensex rising 221.17 points to 76,791.52, while Nifty gained 59.55 points to trade at 23,974.
Foreign institutional investors were net buyers of Indian equities on Wednesday, purchasing shares worth Rs 6,688.37 crore, according to exchange data.
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I write about the forces shaping business and the global economy, from startup growth and changing markets to international trade and policy. My work focuses on breaking down complex developments into clear, practical insights and understanding what they could mean for businesses, investors, and the wider economy.
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