The Indian rupee staged a sharp recovery on Friday, climbing back to the 94-per-dollar level after the Reserve Bank of India (RBI) unveiled a series of measures aimed at attracting foreign capital and easing pressure on the domestic currency. The move came amid concerns over rising crude oil prices, persistent foreign fund outflows, and heightened geopolitical tensions in West Asia.
The rupee ended the day at 94.93 against the US dollar, strengthening significantly from its previous close of 95.79. The currency recorded its biggest single-day gain in nearly two months as investors welcomed the RBI’s efforts to bolster external inflows and stabilize the foreign exchange market.
Earlier in the day, the RBI kept the benchmark repo rate unchanged at 5.25 percent while retaining its neutral policy stance. Alongside the policy decision, Governor Sanjay Malhotra announced a package of measures designed to strengthen India’s external sector and support the rupee.
The central bank introduced concessional swap facilities for three-year and five-year Foreign Currency Non-Resident Bank (FCNR(B)) deposits and extended similar support for External Commercial Borrowings (ECBs) raised by central public sector enterprises. It also expanded foreign investor access to government securities under the Fully Accessible Route (FAR), removed certain investment concentration limits, and eased investment norms for non-residents.
Market participants viewed the measures as a clear signal that the RBI prefers to strengthen the balance of payments through capital inflows rather than relying solely on direct intervention in the currency market. Analysts estimate the package could attract between $25 billion and $40 billion in fresh inflows over time, helping offset pressures from expensive oil imports and foreign portfolio outflows.
The rupee had been under pressure in recent weeks, touching record lows amid a surge in crude oil prices and escalating tensions in the Middle East. The RBI had already intervened in the forex market through dollar sales to curb excessive volatility, but the latest measures are expected to provide a more durable source of support for the currency.
While the RBI maintained its growth-supportive stance, it revised its FY27 inflation forecast upward to 5.1 percent from 4.6 percent and lowered its GDP growth projection to 6.6 percent from 6.9 percent, citing global uncertainties and energy-related risks.
With the rupee now back below the 95 mark, market attention will shift to whether the RBI’s measures translate into sustained foreign inflows and provide lasting support to the currency amid an uncertain global environment.
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