Rupee. (File Photo: IANS)
Mumbai, September 3 (IANS): The Indian rupee surged 67 paise to a two-month high against the US dollar on Thursday and logged its biggest single-day gain since June after the Reserve Bank of India's foreign currency non-resident bank (FCNR-B) inflows significantly exceeded market expectations.
The rupee opened at 94.30 against the dollar compared with 94.97 at the previous close.
The substantial jump in the domestic currency came after the central bank on Wednesday said that it had garnered $127.23 billion in inflows through the FCNR-B route. Including external commercial borrowings and overseas foreign currency borrowings, cumulative inflows stood at $136.38 billion.
The strong mobilisation reflects the exceptionally high response to the central bank's June 8 facility aimed at attracting foreign currency into the Indian banking system and strengthening the country’s external buffers.
The pace of inflows accelerated sharply in August. As of August 21, banks had mobilised $65.4 billion through FCNR(B) deposits, while combined inflows through FCNR(B) deposits, ECBs and OFCBs stood at around $73 billion. The subsequent surge pushed total mobilisation to $136.38 billion by the end of August.
Given the strong response, the RBI decided to advance the closure of the FCNR(B) deposit mobilisation window to August 31 from the earlier September 30 deadline. However, the swap facility for eligible FCNR(B) deposits already mobilised will continue to be available with the RBI until September 11.
According to currency market experts, the immediate trading range for the rupee appeared to be Rs 94.10-Rs 95.50. They also noted that a decisive break below Rs 94.10 could open the way towards Rs 93.50. The RBI's stronger foreign exchange position would give it greater room to rebuild reserves while limiting excessive depreciation in the rupee.
However, elevated Brent crude prices and rising global bond yields remain risks for the rupee, as per experts.
Brent crude was trading near $95 a barrel amid geopolitical tensions.
