RBI Inflow Measures Support Indian Rupee Amid Ongoing Oil Price Pressures

The Indian Rupee (INR) has seen some stability against the US Dollar (USD), despite the recent upward pressure from oil prices. According to Commerzbank analysts, USD/INR was little changed near 96.57 on Friday but has edged higher since early July.

Commerzbank analysts argue that the recent pullback in oil prices should ease some strain on the Rupee. The Reserve Bank of India (RBI) measures to attract foreign inflows via FCNR(B), ECB, and OFCB schemes are gaining traction and could draw up to USD80 billion by year-end.

The RBI's efforts to attract foreign capital are showing signs of success, with domestic banks reporting USD20.7bn in deposits as of 17 July. These measures are estimated to attract up to USD80bn by year-end, and the FCNR(B) facility will close on 30 September, while the ECB and OFCB schemes will expire on 31 December.

However, Commerzbank analysts also note that renewed Middle East tensions pose a downside risk through higher energy costs and potential supply-chain disruptions. The pickup in price pressures could complicate the RBI's wait-and-see stance.