Rupee Recovers to Pre-Recent Downturn Levels Amid RBI's Supportive Measures

Rupee Posts Biggest Single-Day Gain in Two Months

The Indian rupee recorded a significant gain on June 5, as a series of measures announced by the Reserve Bank of India (RBI) earlier in the day helped improve investor sentiment and bolster the currency.

The local currency ended the trading session at Rs 94.93 per dollar, marking a notable improvement from the previous day's rate of Rs 95.79 per dollar. Throughout the day, the rupee had opened at Rs 95.71 per dollar and traded within a 70-paise range.

In a bid to arrest currency depreciation and attract capital inflows, the RBI introduced several measures earlier in the day. These included a swap facility for three-year and five-year foreign currency non-resident bank (FCNR-B) deposits and a similar concessional swap facility for external commercial borrowings (ECBs) by central public sector enterprises (CPSEs).

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The RBI's decision to keep interest rates steady at 5.25 percent and maintain its 'neutral' stance, while revising its inflation target to 5.1 percent for FY27 (from 4.6 percent) and guiding its GDP forecast to 6.6 percent (from 6.9 percent) in FY27, further contributed to the improvement in investor sentiment.

The RBI's package signals a clear preference for strengthening the external account through market-friendly capital inflow measures rather than relying solely on foreign exchange intervention.