New Delhi, June 5 (IANS): The Indian rupee strengthened sharply against the US dollar on Friday after the Reserve Bank of India (RBI) announced measures aimed at improving capital flows and easing investment norms for foreign portfolio investors (FPIs). The domestic currency appreciated by 50 paise to 95.24 against the dollar in intraday trade after opening at 95.72 in the interbank foreign exchange market, compared to its previous close of 95.74. The rally followed the RBI’s decision to keep policy rates unchanged for the second consecutive meeting while unveiling steps to enhance investment flows and bolster market confidence amid global uncertainties. RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) had unanimously decided to retain the repo rate at 5.25 per cent and maintain a neutral policy stance. The central bank also raised investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments and eased norms governing FPI investments in government securities.
Malhotra reiterated that the RBI does not target any specific level or trading band for the rupee and that its exchange rate policy remains unchanged. Market experts said measures such as the expansion of the Fully Accessible Route (FAR) for bonds, relaxation of FPI debt investment norms, a temporary FCNR(B) deposit window and concessional foreign exchange swap facilities are expected to support the domestic currency and improve dollar inflows. They added that despite concerns over elevated crude oil prices and higher inflation projections, investor sentiment was boosted by the RBI’s assurance on adequate foreign exchange reserves, currently around $682 billion. Brent crude, the international benchmark, traded near $95.37 per barrel in futures trade. The RBI also revised its macroeconomic outlook, lowering FY27 GDP growth projections to 6.6 per cent from 6.9 per cent earlier, while raising CPI inflation estimates to 5.1 per cent from the previous forecast of 4.6 per cent.