The Indian rupee regained strength following the Reserve Bank of India’s decision to end its foreign-exchange swap facility for non-resident deposits ahead of schedule, while global dollar softness supported the currency in a cautious market environment.
The Indian rupee firmed on Monday after two sessions of losses, even as traders assessed the Reserve Bank of India’s decision to close its foreign-exchange swap facility for foreign currency non-resident deposits earlier than planned. FXStreet reported that the dollar-rupee pair was trading around 95.50, with market participants expecting the exchange rate to stay within a narrow 95.00-95.50 band this week.
According to the RBI, the swap window was designed to support fresh FCNR(B) deposits by allowing banks to exchange the dollar proceeds with the central bank at the reference rate, reducing foreign-exchange risk. The central bank said the measures tied to the scheme had drawn nearly $57bn, underlining the scale of demand from overseas depositors.
Traders are now watching for a possible short-term rush from non-resident clients seeking to lock in deposits before the facility’s closing date. Attention is also turning to the minutes of the RBI’s August policy meeting, when rates were left unchanged. Analysts quoted by FXStreet expect the central bank either to begin only a very modest rate-hiking cycle in December or to stay on hold through the rest of 2026.
The currency’s immediate direction is also being shaped by a softer US dollar. FXStreet said weaker-than-expected US retail sales and easing expectations for Federal Reserve tightening have pressured the greenback. On the domestic side, economists at Societe Generale said India’s inflation trend remains contained, pointing to July consumer price growth of 4.45% year on year, which supports the RBI’s decision to keep policy steady.
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