New Delhi, India, August 19 (ANI): The rupee is expected to remain broadly stable at around 95 per U.S. dollar over the next one to two months and gradually weaken toward 97 per dollar by March 2027, following the Reserve Bank of India’s early closure of the special Foreign Currency Non-Resident (Bank) (FCNR(B)) deposit window, according to a report by Ashika Institutional Equities.
The Indian rupee edged higher Wednesday despite elevated oil prices, supported by Reserve Bank of India intervention, foreign institutional investor inflows and a weaker dollar index. It opened at 95.71 and was trading at 95.75 per U.S. dollar at the time of reporting.
The RBI has advanced the closure of its special foreign exchange swap facility for FCNR(B) deposits to Aug. 31, 2026, with banks having mobilized $52.3 billion as of Aug. 14. While the earlier closure is likely to reduce additional FCNR(B) inflows, Ashika expects total special foreign exchange inflows, including Overseas Foreign Currency Bonds (OFCBs) and External Commercial Borrowings (ECBs), to reach $80 billion to $85 billion, up from its earlier estimate.
“We maintain our FY27 BoP surplus estimate of ~$70 billion, implying little change in the underlying demand-supply balance for USD,” the fund house said.
The report also said the RBI may be using the additional dollar inflows tactically. Unlike in 2013, the rupee has not strengthened significantly despite the surge in special inflows, possibly because the central bank is using the additional dollar supply to partly unwind and extend the maturity of its record $103 billion net short forward position, equivalent to around 19 percent of its foreign currency assets. Around $39 billion of this position is due to mature by June 2027.
“We now expect the INR to remain broadly stable ~95 over the next 1-2 months, before weakening gradually toward 97 by Mar’27,” the report said.
Looking ahead, as the boost from FCNR(B) inflows fades, the rupee is likely to become more sensitive to geopolitical developments in the Middle East, the Federal Reserve’s interest-rate trajectory and broader dollar trends.
“Over the medium term, domestic growth-inflation balance, fiscal prudence and policy credibility will remain the key anchors,” the report said.
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