Rupee Edges Lower After RBI Closes Discounted Swap Window

The Indian rupee opened weaker on Monday at 95.48 against the US dollar, down 5 paise from Friday's close of 95.43.

This downward pressure was attributed to the Reserve Bank of India's decision to prematurely close its discounted foreign-exchange swap window for FCNR(B) deposits.

The RBI had initially set a deadline of September 30, but has now moved it to August 31 after foreign currency inflows through the scheme reached $56.8 billion.

Economist Dhiraj Nim from ANZ Research said the initial reaction was negative, but described the impact as likely to be temporary: 'I think there's been a bit of a negative impact this morning, but I think it's a very transient, sentimental impact.'

Nim also stated that the RBI had taken a well-timed decision given the scale of inflows.