Rupee Hits Two-Month High, Opens 67 Paise Higher at 94.30 Against U.S. Dollar

The Indian rupee opened 67 paise higher at 94.30 against the U.S. dollar on Thursday, September 3, reaching its strongest level in two months after India attracted substantial foreign-currency inflows.

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The domestic currency had closed at 94.97 against the dollar on Wednesday, according to Moneycontrol. The opening level of 94.30 was the rupee’s highest since late June, Reuters reported. The currency has gained more than 1% this week, placing it among Asia’s best-performing currencies.

Foreign-currency inflows

India raised $136.38 billion through special foreign-currency measures introduced by the Reserve Bank of India in June, according to RBI figures cited by Reuters and CNBC-TV18. The amount was substantially higher than market expectations.

Foreign Currency Non-Resident Bank deposits accounted for $127.23 billion of the total. External commercial borrowings brought in $3.89 billion, while overseas foreign-currency borrowings added $5.26 billion, as per the RBI data reported by CNBC-TV18.

The measures were introduced to attract foreign currency and strengthen India’s capacity to manage external financial pressures. Banks collect deposits in foreign currencies and exchange the funds with the RBI, adding to the central bank’s foreign-exchange reserves.

India’s foreign-exchange reserves reached a record $729.33 billion in the week ended August 21, according to RBI figures cited by Reuters and CNBC-TV18.

Dollar index declines

The dollar index, which measures the U.S. currency against a basket of major currencies, fell 0.05% to 99.54 in early trade, according to Moneycontrol.

The euro gained 0.02% to $1.1589. The Japanese yen strengthened 0.07% to 158.59 per dollar after rising 0.9% in the previous session, the report said.

Asian currencies were largely stronger against the dollar. The Malaysian ringgit rose 0.235% and the Thai baht gained 0.118%. The Indonesian rupiah declined 0.107%, making it the only currency in the tracked basket to weaken, according to Moneycontrol.

Oil and bond yields remain risks

Higher crude oil prices and elevated U.S. bond yields remain key external pressures for the rupee.

Brent crude has risen 7% this week and reached its highest level since late July amid renewed conflict between the U.S. and Iran, Reuters reported. Higher oil prices can increase India’s import bill because the country depends heavily on overseas crude supplies.

Expectations of a possible interest-rate increase by the U.S. Federal Reserve have also kept the dollar supported. The probability of a rate increase at the Fed’s September meeting stood at roughly two in three, while the 10-year U.S. Treasury yield was near its highest level in almost three years, according to Reuters.