17 August,2026 10:22 AM IST | Mumbai | mid-day online correspondent
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The rupee depreciated 17 paise to 95.59 against the US dollar in early trade on Monday, as a cautious market environment and concerns over future foreign currency inflows weighed on the domestic currency.
Forex traders said investor sentiment turned cautious after the Reserve Bank of India (RBI) announced on August 14 that its swap facility for FCNR (B) deposits would be available only for deposits mobilised until August 31. The earlier cut-off date for Foreign Currency Non-Resident (Bank), or FCNR (B), deposits was September 30.
Under the FCNR (B) scheme, banks offer attractive interest rates to mobilise foreign currency deposits from eligible non-resident depositors.
The RBI on Friday said its concessional swap facility, introduced to encourage foreign currency inflows, had attracted USD 56.84 billion as of August 13.
The change in the cut-off date has prompted market participants to assess whether foreign currency inflows under the scheme will remain as strong once the facility expires. While the inflows have provided support to the rupee, traders are also looking at how the currency may perform after this temporary source of foreign exchange support fades.
"After attracting nearly USD 50 billion of forex inflows, the central bank has now announced that the facility will be available only for deposits mobilized until August 31, 2026. The support from these inflows remains significant, but the market will eventually begin looking beyond this temporary cushion," CR Forex Advisors MD- Amit Pabari said.
At the interbank foreign exchange, the rupee opened at 95.50 and subsequently declined to 95.59, down 17 paise from its previous close.
On Friday, the rupee had appreciated 3 paise to close at 95.42 against the US dollar.
Pabari said the domestic currency could remain supported in the near term, although the broader risk-reward equation appeared tilted towards weakness.
"While the rupee may remain supported in the near term, the overall risk-reward appears tilted towards weakness," Pabari said.
He also pointed to key technical levels that could determine the currency's near-term movement.
"Technically, the 95.20-95.30 zone is likely to act as an important support area. As long as this level holds, USD/INR could gradually move towards the 96.20-96.50 region in the coming days," he said.
The dollar index, which measures the strength of the US dollar against a basket of six major currencies, was trading at 99.54, down 0.12 per cent.
Global crude oil prices also remained a factor for the rupee. Brent crude, the global oil benchmark, was trading 0.47 per cent higher at USD 88.94 per barrel in futures trade.
Higher crude prices can put pressure on the Indian currency because the country is heavily dependent on imports to meet its energy requirements. A sustained increase in oil prices can also widen the import bill and increase demand for dollars.
The decline in the rupee came alongside weakness in the domestic equity market. The 30-share BSE Sensex declined 284.85 points to 77,717.05 in early trade, while the Nifty dipped 69.25 points to 24,297.05.
Foreign Institutional Investors (FIIs) remained net buyers in Indian equities on Friday. According to exchange data, foreign institutional investors purchased equities worth Rs 508.12 crore on a net basis.
Foreign fund flows remain an important factor for the rupee, as sustained inflows can increase the availability of dollars in the domestic market, while outflows can have the opposite effect.
India's foreign exchange reserves provided another positive indicator. The country's forex reserves jumped USD 14.136 billion to USD 707.002 billion during the week ended August 7, according to data released by the RBI on Friday.
The increase followed a rise of USD 10.512 billion in the previous reporting week ended July 31, when the overall reserves stood at USD 692.866 billion.
(With inputs from PTI)
