Indian Rupee Surges Against Dollar Amid Rising Forex Reserves

The Indian Rupee has opened higher against the US Dollar at the start of the week, with the USD/INR pair dropping to near 94.38 due to a significant increase in forex reserves.

This is largely attributed to an overwhelming response by non-residents to the Reserve Bank of India's special foreign deposits window, which has strengthened the Indian currency.

Analysts at MUFG point out that the Indian Rupee has been a notable outperformer, driven by much higher-than-expected dollar inflows from RBI's FCNR(B) FX measures, reaching above US$130bn in total as of 31 Aug.

However, the bank advises investors not to be overly optimistic about the Indian currency, as it still expects USD/INR to trend higher over time.