The rupee opened five paise lower on Aug 17 after the RBI advanced the FCNR‑B swap window deadline to Aug 31 from Sept 30, trading at 95.48 against the dollar after ending the previous session at 95.43.
The RBI announced on Aug 14 that the scheme had received a strong market response and would bring forward the deadline to Aug 31. The decision surprised markets because just ten days earlier, RBI Governor Sanjay Malhotra said there was no talk of closing the window prematurely.
Although the FCNR‑B scheme has drawn more than $50 billion in inflows over the past two months, it has not produced a noticeable rise in the rupee.
Amit Pabari, managing director at CR Forex Advisors, noted that the rupee may stay supported in the near term, but the overall risk‑reward tilts toward weakness. He identified the Rs 95.20–95.30 zone as a key support level and suggested that, if it holds, the dollar could move toward Rs 96.20–96.50.
The rupee has hovered around the 95‑to‑a‑dollar range since the start of the month. It briefly touched 94.30 in July but has since lost momentum. This decline comes even as the dollar retreated after weak US retail sales data lowered expectations of a Fed rate hike next month.
Experts say a stronger-than‑expected response and rising costs of maintaining the scheme amid rupee pressure likely prompted the RBI’s surprise decision to close the window early. The RBI reported $56.8 billion in total inflows, with FCNR deposits accounting for $52.3 billion.
Money‑market specialists attribute the move to increasing carrying costs, noting that aside from cost implications, there was no other compelling reason for an earlier closure.
The inflows boosted the RBI’s forex reserves to a four‑month high of $707 billion by Aug 7, giving the central bank a larger buffer to counter rupee weakness.
Throughout last week, the RBI sold dollars through state‑run banks to support the currency.