Rupee Gains 2 Paise to Close at 95.74 Against US Dollar
5 Jun 2026 9:45 AM IST5 Jun 2026 9:45 AM IST
Heightened geopolitical tensions between the US and Iran drove energy volatility and aggressive safe-haven buying capped sharp gains in the local unit.
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Mumbai: The rupee logged its biggest single‑day gain since April 2, strengthening 81 paise to close at one month high at 94.94 levels against the US dollar as the RBI left its benchmark repo rate unchanged at 5.25 per cent and unveiled a series of measures aimed at attracting foreign capital and supporting the Indian rupee that has fallen by 10 per cent year on year in the past 12 months. The net FPI equity outflows this fiscal year up to June 2 stood at $13.7 billion that has added pressure on the rupee.
Despite raising its inflation forecast for the fiscal year ending March 2027 to 5.1 per cent from 4.6 per cent, the RBI maintained a neutral policy stance, signalling that it prefers to wait for greater clarity on inflation dynamics before considering further action. The decision underscored the RBI's preference for supporting growth and stabilizing the rupee through capital-flow measures rather than higher interest rates.
To shore up external financing, the central bank unveiled a six-point package aimed at boosting capital inflows via G‑Secs, FPIs and FCNR(B) deposits.
The central bank announced concessional forex swap facility until September 30 2026 for 3-5 year External commercial borrowings raised by Central Public Sector Enterprises (CPSEs). It also announced FCNR(B) deposits in the 3-5 year range with full hedging cost borne by the RBI. Other measures were expanding the universe of specified securities for foreign portfolio investment (FPI) in government securities, removing various limits on FPI investment in G-secs under the general route, raising the limit for investments by NRIs and overseas citizen of India in equity instruments traded on the stock market without SEBI registration. Simultaneously, the government announced that FPI investments in government securities would not attract any capital gain tax and withholding Tax.
At the interbank foreign exchange market, the rupee opened at 95.72, then touched an intraday high of 94.89 and finally ended the session at 94.93 registering a rise of 81 paise from its previous close. On Thursday, the rupee rose 2 paise to settle at 95.74 against the U.S. dollar.
The currency outperformed Asian peers after the RBI’s capital‑flow measures, aided by a softer dollar and lower crude prices.
The benchmark 10 year bond yield ended the day at 6.98 per cent, down one basis points from previous closing perspective.
To shore up external financing, the central bank unveiled a six-point package aimed at boosting capital inflows via G‑Secs, FPIs and FCNR(B) deposits.
The central bank announced concessional forex swap facility until September 30 2026 for 3-5 year External commercial borrowings raised by Central Public Sector Enterprises (CPSEs). It also announced FCNR(B) deposits in the 3-5 year range with full hedging cost borne by the RBI. Other measures were expanding the universe of specified securities for foreign portfolio investment (FPI) in government securities, removing various limits on FPI investment in G-secs under the general route, raising the limit for investments by NRIs and overseas citizen of India in equity instruments traded on the stock market without SEBI registration. Simultaneously, the government announced that FPI investments in government securities would not attract any capital gain tax and withholding Tax.
At the interbank foreign exchange market, the rupee opened at 95.72, then touched an intraday high of 94.89 and finally ended the session at 94.93 registering a rise of 81 paise from its previous close. On Thursday, the rupee rose 2 paise to settle at 95.74 against the U.S. dollar.
The currency outperformed Asian peers after the RBI’s capital‑flow measures, aided by a softer dollar and lower crude prices.
The benchmark 10 year bond yield ended the day at 6.98 per cent, down one basis points from previous closing perspective.
( Source : Deccan Chronicle )
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