Rupee Soars as Record FCNR Deposits Boost Forex Liquidity
The Indian rupee has seen a significant gain against the US dollar in early trading on Thursday. The currency rose by 47 paise to trade at 94.26, as record foreign-currency deposit mobilization bolstered the country's foreign-exchange liquidity.
The Reserve Bank of India announced that foreign currency non-resident (Bank) deposits had attracted $127.226 billion as of August 31 under a special program. This figure, combined with overseas foreign-currency borrowings and external commercial borrowings, brought total inflows to $136.377 billion.
Forex traders have attributed the rupee's strength to strong underlying inflows and aggressive intervention by the RBI, countering pressure from higher crude oil prices and global yields. The record FCNR(B) deposits will also create a liquidity surplus in the banking system, making it easier for the RBI to defend the rupee.