Rupee began Thursday on a strong note, gaining 47 paise to 94.26 against US dollar in early trade, as record foreign-currency deposit mobilisation bolstered the country’s foreign-exchange liquidity.The currency opened at 94.30 at the interbank foreign exchange market before moving up to 94.26. It had closed at 94.73 on Wednesday, after gaining 22 paise.The strong move came after the Reserve Bank of India said foreign currency non-resident (Bank), or FCNR(B) deposits had brought in $127.226 billion as of August 31 under a special programme.Including overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB), the measures attracted total inflows of $136.377 billion.Forex traders said that rupee was being supported by strong underlying inflows and aggressive intervention by the RBI, helping counter pressure from higher crude oil prices and global yields.
Record FCNR(B) inflows strengthen RBI’s hand
The record mobilisation through FCNR(B) deposits has also raised the amount of liquidity that could enter the banking system as banks swap the deposits with the RBI.“This gives RBI a long rope in terms of defending rupee, it creates a huge sterilisation problem as banking system liquidity surplus will likely go to around Rs 10 lakh crore as banks swap the deposits with RBI,” IFA Global said in a research note.The FCNR(B) deposits were mobilised under the special central-bank programme aimed at bolstering India’s foreign-exchange liquidity.
Dollar, oil prices remain in focus
The dollar index was at 99.43, down 0.16 per cent. The index tracks the greenback against a basket of six major currencies. Its movement came amid safe-haven demand linked to renewed US-Iran tensions.Brent crude, meanwhile, was trading 0.16 per cent lower at $95.48 per barrel in futures trade. Oil prices were influenced by escalating US-Iran tensions and fears of disruption to flows through the Strait of Hormuz.Despite these pressures, rupee strengthened in early trading as the inflows and RBI intervention provided support.Domestic equities also opened higher with the BSE Sensex rising 221.17 points to 76,791.52, while Nifty gained 59.55 points to trade at 23,974.Foreign institutional investors were net buyers of Indian equities on Wednesday, purchasing shares worth Rs 6,688.37 crore, according to exchange data.
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