The Indian rupee strengthened eight paise to close at 84.79 against the dollar on Friday. It opened flat at 84.86 against the greenback, according to Bloomberg data. The domestic current had closed at 84.87 on Thursday.
Last week, however, the rupee had shown signs of stabilising, supported by the Reserve Bank of India’s decision to maintain steady interest rates and implement measures to enhance liquidity in the market.
Last week, the Monetary Policy Committee decided to maintain the repo rate at 6.5% for the eleventh consecutive time, with a 4:2 majority. The standing deposit facility remained at 6.25%, and both the marginal standing facility rate and bank rate have been kept unchanged. The MPC also unanimously agreed to retain a neutral stance.
A key development this week has been the appointment of Sanjay Malhotra as the new RBI governor.
In response to the rupee’s continued struggles, the RBI has taken proactive measures to support the currency and attract foreign investment. Among these steps, the central bank raised the interest rate ceiling on one-year Foreign Currency Non-Resident deposits by 200 basis points to 400 basis points. The RBI also increased the ceiling on FCNR(B) deposits with 3-5 year maturities. These measures, which are intended to boost capital inflows, will remain in place until March 31, 2025.
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