Indian Rupee: Range holds against US Dollar as inflows offset trade drag – DBS
DBS economist Radhika Rao observes that strong FCNR (B) swap inflows and higher FX reserves have not translated into significant Rupee gains, with USD/INR staying in a tight 95.50–96.00 range.
The Indian Rupee has remained range-bound against the US Dollar, hovering in a tight 95.50–96.00 range, according to DBS economist Radhika Rao. The stability is attributed to spot-neutral swap flows, hedging demand, and official intervention, despite improving portfolio flows and a surge in flows through the special swap schemes.
Banks have raised a cumulative $72.8bn via the swap windows by August 21, with nearly 90% coming through the deposit program. This surge has the potential to push total FCNR funds over $70-75bn, bringing the overall amount above $80-90bn. While the pace of fund raising has accelerated in recent weeks, the pressure from a large goods trade deficit continues to hinder significant gains in the Rupee.
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