Rupee Surges to Two-Month Peak Driven by FCNR (B) Deposits and RBI Intervention

The rupee rose about 21 paise on Tuesday, even as crude oil prices hardened to around $91 per barrel, after the Reserve Bank of India reportedly intervened in the non‑deliverable forward (NDF) market ahead of the domestic forex market opening.

The rupee finished below the 95 level on Tuesday, marking a two‑month high of 94.95 against the US dollar, supported by strong inflows into Foreign Currency Non‑Resident (Bank) – FCNR(B) deposits under the RBI’s concessional swap scheme and by the central bank’s apparent intervention amid escalating geopolitical tensions in the Middle East that lifted crude oil prices.

interest rates

The Indian currency (INR) ended the session at virtually the same level it recorded on June 5, when the RBI unveiled measures to attract foreign capital. Since the concessional swap facility was available only for FCNR(B) deposits mobilised by banks through August 31, the interest rates on those deposits will revert to roughly 3‑4 % from the 6.00‑7.50 % offered during the 85‑day window when the scheme was open (June 8 2026 to August 31 2026).

Market participants estimate that during the scheme’s tenure banks mobilised about $80 billion in 3‑5‑year FCNR(B) deposits and swapped them with the RBI. When the RBI on June 5 announced measures—including a time‑limited concessional forex swap to encourage ECBs by public sector undertakings and a facility covering the full hedging cost for banks raising fresh 3‑5‑year FCNR(B) deposits—the rupee surged 85 paise to close at 94.94 per dollar.

On Tuesday the rupee added roughly 21 paise, even as crude oil prices firmed to around $91 per barrel, after the RBI reportedly acted in the non‑deliverable forward (NDF) market prior to the domestic forex open.

Dilip Parmar, senior research analyst at HDFC Securities, noted that the rupee is on a winning streak, securing its third consecutive day of gains and outpacing Asian peers, buoyed by robust domestic growth data even as geopolitical tensions simmer and the central bank supplies dollars to the market.

“Technically, the spot USD/INR pair is encountering strong resistance near 95.30, while solid support sits around 94.50. Traders should brace for heightened volatility as geopolitical developments and climbing crude oil prices are poised to drive significant price swings,” he added.

Abhishek Bisen, head of fixed income at Kotak Mutual Fund, observed that inflows into FCNR(B) deposits comfortably outweighed headwinds from Brent crude prices hovering near $91.88 per barrel, geopolitical tensions in the Middle East and expectations of a possible US Federal Reserve rate increase.

“The strong estimated 7.8 % GDP growth for Q1 FY27 further bolstered sentiment. Overall, the solid inflows underscore sustained investor confidence in India and the appeal of rupee‑denominated assets,” he said.

forex reserves

Banks attracted $65.397 billion in FCNR(B) deposits between June 8 and August 21, propelling India’s foreign‑exchange reserves to a historic peak of $729.328 billion in the week ending August 21. Reserves surged $12.422 billion during that week, and have climbed $38.221 billion since the end of March 2026. The prior record of $728.494 billion was set in the week ended February 27.

Published on September 1, 2026

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