Indian rupee logs best week in five as RBI muscle power, foreign deposits support
MUMBAI: The Indian rupee ended largely unchanged Friday, but posted its best weekly performance against the U.S. dollar in five weeks, helped by stronger-than-expected dollar inflows into the central bank’s special schemes. The Indian rupee moved in a narrow six paisa range before ending at 94.4850, aided by the Reserve Bank of India, which intervened at the start of the session and continued to…
The Indian rupee ended the week with minimal change on Friday, but experienced its most significant weekly gain against the U.S. dollar in five weeks. Helped by stronger-than-expected dollar inflows into the Reserve Bank of India's (RBI) special schemes, the currency moved within a narrow six-paisa range, finishing at 94.4850. The RBI played a crucial role in the rupee's rise, intervening at the start of the session and continuing to sell dollars throughout the week.
This forceful intervention, combined with a dollar inflow exceeding expectations, led to the rupee's biggest gain against the dollar since late July. The RBI's increased intervention, driven by its special schemes attracting over $136 billion in June-August, has bolstered hopes that the central bank is actively steering the rupee upwards.
However, the underlying fundamentals still present risks, with 94.00–94.20 identified as a significant support zone for the USD/INR exchange rate. Despite a rally in oil prices, with Brent crude exceeding $96 per barrel, the rupee's weekly gain remains notable. Analysts suggest that upcoming U.S. data, including nonfarm payrolls and inflation figures, will be closely monitored ahead of the Federal Reserve's September meeting, as they could impact market expectations for the central bank's future policy stance.
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