$136.37 billion in forex inflows drives rupee to 10-week high at 94.59

The Indian rupee gained 14 paise to close at 94.59 against the US dollar, marking its fifth consecutive session of appreciation and a 10-week closing high. This performance was driven by higher-than-expected foreign currency deposits. The Reserve Bank of India mobilized a record $127.23 billion through foreign currency non-resident bank deposits under a special central bank programme. When including overseas foreign-currency borrowings and external commercial borrowings, total inflows reached $136.377 billion according to RBI data. The rupee opened the session at 94.30 before settling at 94.59 (provisional). Analysts attribute the surge to improved balance of payment conditions, softening of the US dollar, and rising US treasury yields which offered better returns for the central bank. Despite concerns regarding hedging and liquidity management costs, officials state that returns from deploying these inflows in US treasuries will offset expenses. Market experts suggest this influx will strengthen foreign reserves to surpass $750 billion.