Rupee gains 50 paise against dollar after RBI relaxes investment norms
New Delhi, June 5
The Indian rupee appreciated sharply against the US dollar on Friday after the Reserve Bank of India eased investment norms for foreign portfolio investors and announced measures aimed at improving capital flows, boosting investor sentiment.
The domestic currency strengthened by 50 paise to 95.24 against the US dollar in intraday trade after opening at 95.72 in the interbank foreign exchange market. The currency had settled at 95.74 against the dollar in the previous session.
The sharp appreciation came after the RBI kept policy rates unchanged for the second consecutive meeting while unveiling measures to improve investment flows and market confidence amid global uncertainties.
Announcing the second bi-monthly monetary policy of FY27, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously decided to retain the repo rate at 5.25 per cent while maintaining a neutral policy stance.
The central bank also raised investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments and eased norms governing FPI investments in government securities.
Malhotra reiterated that the RBI's exchange rate policy remains unchanged and that the central bank does not target any specific level or trading band for the rupee.
According to experts, measures such as expansion of the Fully Accessible Route (FAR) for bonds, easing FPI debt investment norms, a temporary FCNR(B) deposit window and concessional foreign exchange swap facilities are expected to support the domestic currency and improve dollar inflows.
They added that while the central bank acknowledged risks from elevated crude oil prices and revised inflation projections higher, its reassurance on adequate forex reserves -- currently around $682 billion -- helped boost market confidence.
In addition, global crude oil prices remained elevated, the international benchmark Brent crude traded nearly 1 per cent higher trading 0.36 per cent higher at $95.37 per barrel in futures trade.
Moreover, the RBI revised its macroeconomic projections, lowering FY27 GDP growth estimates to 6.6 per cent from 6.9 per cent earlier while raising CPI inflation projections to 5.1 per cent from the previous estimate of 4.6 per cent.
— IANS
Reader Comments
Ek baat toh clear hai - RBI is doing its best to stabilize the economy. But with crude oil at $95+, it's an uphill battle. Hope the NRI investment window helps bring more dollars in. Desh ki zaroorat hai stability abhi.
The GDP growth cut to 6.6% is worrying. But at least RBI is being transparent. The repo rate pause helps home loan borrowers. I think the rupee's recovery will be gradual - don't expect it to hit 90 again anytime soon.
As a student planning to study abroad, this slight appreciation helps a little. But the real issue is inflation. RBI raising CPI projection to 5.1% means my family's grocery budget will keep increasing. Sab kuch mehanga ho raha hai.
Neutral stance is good but I wish they'd done more for the common person. The rich will benefit from NRI investment windows, but what about small businesses struggling with inflation? Aur kya karein, hope for the best.
$682 billion forex reserves is a strong cushion. But we should not get complacent. The global uncertainties are huge - Ukraine war, oil prices, US interest rates. RBI needs to stay vigilant. At least the FAR bond route expansion is a smart move.
M Michael C