Rupee Reversal: Crude Oil Prices Dent Gains from FCNR(B) Boost

The Indian rupee's gains in early September were reversed due to higher crude oil prices. The rupee had been supported by FCNR (B) deposit flows under the Reserve Bank of India's concessional swap window, which reached $143.5 billion as of September 18.

This amount included nearly $133 billion from FCNR(B) deposits, with the scheme closed one month ahead of its original deadline on September 30. RBI Deputy Governor Poonam Gupta noted that the special capital flow measures implemented in June helped India record a meaningful balance of payments surplus this year.

Gupta also stated that the rupee's depreciation could be temporary and described it as an 'overcorrection'. She mentioned that the market analysts anticipated the rupee to appreciate from current levels when the capital flow measures were first announced. The rupee is currently trading at ₹95.82 per US dollar.