The rupee, on Thursday, perked up to a two-and-a-half month high due to massive inflows into Foreign Currency Non-Resident (Bank) deposits under the RBI’s limited period concessional swap facility provided to banks.
The Indian currency (INR) opened 67 paise stronger at 94.30 per US Dollar (USD) in the wake of inflows into FCNR(B) deposits touching a massive $127.23 billion during the 85-day period (June 8-August 31, 2026) that the aforementioned facility was open. It closed at 94.48 per USD, up 49 paise over the previous close of 94.97.
Overall, between June 8 and August 31, the USD-INR Forex Swap facility, provided by the RBI covering FCNR(B) deposits, External Commercial Borrowings and Overseas Foreign Currency Borrowing inflows, attracted inflows of $136.38 billion.
Dilip Parmar, Senior Research Analyst, HDFC Securities, observed that the rupee registered its largest single-day gain since July 27, driven by massive capital inflows from the RBI’s concessional swap scheme. Also, weakness in the greenback and steady oil prices provided vital secondary support.
“The technical setup has turned weak for the spot USDINR, weighed down by a bearish chart pattern of lower highs and lower lows on the daily time-frame. The pair finds immediate support at 94.10 and resistance at 94.95,” he said.
Reserve stock
Radhika Rao, Senior Economist & Executive Director, DBS Bank, assessed that inflows due to RBI’s measures to attract foreign capital are likely to push up the foreign reserves stock to a fresh high past $750 billion in the coming weeks, providing considerable firepower to defend the currency.
“This is already noticeable in the recent shift in the intervention bias. USD/INR, which was earlier stubbornly steady in the face of strong FCNR inflows, has corrected sharply in recent sessions, testing below 95.0 handle to mid-94.0 due to strong intervention dollar sales and broader dollar swings,” she said.
Rao opined that when the dust settles, focus will also be on the bunched-up maturities that will fall due in three-year and five-year tenor of the deposits.
“A portion of the existing reserve stock could be earmarked against these liabilities, helping to mitigate concerns that deposit maturities or debt repayments could trigger a sharp increase in dollar demand and exert pressure on the FX market down the line,” she said.
Terming the RBI’s measures to attract foreign capital flows as a “resounding success”, Aditi Gupta, Economist, Bank of Baroda, said higher interest rates boosted FCNR(B) demand as several banks raised rates on 3-5 year FCNR(B) deposits from around 2-4 per cent to 6-7 per cent, making the deposits more attractive to NRIs.
She emphasised that the robust foreign capital inflows will strengthen India’s external buffers despite global volatility. Gupta expects Current Account Deficit at 1-1.25 per cent of GDP and a Balance of Payments surplus of $65-75 billion in FY27.
”RBI’s dollar mobilisation measures have significantly strengthened India’s forex buffers, while also boosting domestic liquidity and supporting softer short-term and long-term bond yields,” she said.
Published on September 3, 2026
