Rupee Stabilizes Amid Dollar Inflows

A recent Bank of Baroda research report suggests that the rupee may experience stability against the US dollar in the near term, staying within a range of Rs 94.5-96 per dollar.

The report points out that despite significant dollar inflows through FCNR deposits and external commercial borrowings (ECBs), these funds have largely gone into the Reserve Bank of India's reserves instead of entering the market, limiting their impact on the rupee's value.

The analysis found that RBI intervention has a significant relationship with rupee movements, particularly when spot and forward operations are considered together. This suggests that the RBI's use of both spot and forward operations could be more effective in managing the currency.