Rupee Slips as RBI Cuts Off Forex Facility

The Indian rupee depreciated by 17 paise to 95.59 against the U.S. dollar in early trade on Monday, August 17, as investors' sentiment turned cautious due to a recent announcement by the Reserve Bank of India.

The RBI said its swap facility for FCNR (B) deposits will be available only for deposits mobilized till August 31, which is earlier than the previously announced cut-off date of September 30. This decision has attracted significant attention from forex traders and analysts, who believe that the overall risk-reward appears tilted towards weakness.

Amit Pabari, MD of CR Forex Advisors, noted that after attracting nearly $50 billion of forex inflows, the central bank's announcement may lead to a temporary cushion for the rupee. However, the market will eventually begin looking beyond this support.