RBI Swap Facility Move Sends Rupee Tumbling Against Dollar
The Indian rupee depreciated by 17 paise to 95.59 against the US dollar in early trade on Monday, following a cautious investor sentiment after the Reserve Bank of India's (RBI) recent announcement.
The RBI had earlier stated that its swap facility for FCNR (B) deposits will be available only for deposits mobilized till August 31, as opposed to the previous cut-off date of September 30. This decision was made despite attracting nearly USD 56.84 billion in foreign currency inflows through this facility.
According to Amit Pabari, MD of CR Forex Advisors, 'the support from these inflows remains significant, but the market will eventually begin looking beyond this temporary cushion.' He also noted that 'technically, the 95.20-95.30 zone is likely to act as an important support area,' adding that if this level holds, USD/INR could move towards the 96.20-96.50 region in the coming days.