The rupee appreciated by 1% to settle at 94.9 against the US dollar on Friday, June 5 after the introduction of a set measures to bring foreign capital in the country. On Thursday, the Indian currency closed at 95.79 against dollar.
Following the latest appreciation, rupee erased weekly losses, while it still remains around 5% below pre US-Iran War levels.
The government introduced the Income-tax (Amendment) Ordinance, 2026 on June 5 and made effective retrospectively from April 1, 2026, granting eligible foreign investors an exemption on both interest income and capital gains earned from investments in government securities. Foreign Institutional Investors and Foreign Portfolio Investors will no longer pay the 12.5 per cent long-term capital gains tax on listed G-Secs held for more than one year, nor the 20 per cent withholding tax on interest income that applied until now.
Additionally, the Reserve Bank of India announced a set of measures to attract foreign capital into the country, as net outflows from overseas portfolio investors touched US$ 13.7 billion in the current financial year and the rupee continues to face pressure from a risk-off global environment fuelled by the ongoing US-Iran conflict.
Check key measures introduced by RBI
- All new issuances of 15-, 30-, and 40-year tenor government securities will now be included as specified securities under the Fully Accessible Route.
- The RBI will offer a concessional forex swap facility until 30 September 2026.
- Authorised dealer banks raising fresh FCNR(B) deposits of 3–5-year maturity will have their full hedging costs borne by the RBI.
- Investment limits for Non-Resident Indians, Overseas Citizens of India, and all individual Persons Resident Outside India in equity instruments traded on domestic exchanges without SEBI registration are being raised and standardised.
- The time available for realisation of export proceeds is being restored to nine months.
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