Rupee ends higher at 84.6875 as RBI holds rates but logs fifth straight weekly fall

Rupee closed at 84.6875 per dollar on Friday, recovering from Thursday’s 84.7325, as the Reserve Bank of India (RBI) kept policy rates unchanged but cut the cash reserve ratio (CRR) by 50 basis points to 4 per cent. This measure is expected to ease monetary conditions and support economic growth.

Weekly decline extends for the fifth week

Despite Friday’s gains, the rupee marked its fifth consecutive weekly fall, losing 0.2 per cent. Earlier in the week, it touched an all-time low of 84.7575, driven by a weak Chinese yuan and strong dollar bids in the non-deliverable forwards market.

RBI raises FCNR deposit interest ceiling

To counter currency pressure and attract forex inflows, the RBI increased the interest rate ceiling on foreign currency non-resident (FCNR-B) deposits. Banks can now offer rates up to 400 basis points above the Overnight Alternative Reference Rate (ARR), compared to the previous 200 basis points.

Dollar index and global cues

The dollar index hovered at 105.8 after a dip earlier in the week, while Asian currencies showed mixed performance. Markets are now focused on U.S. non-farm payroll data, which could influence Federal Reserve rate decisions.

Outlook remains cautious

Traders remain cautious, citing ongoing dollar demand from importers, including oil companies. MUFG Bank analysts noted that while RBI measures might temporarily stabilize the rupee, they are unlikely to alter the broader USD/INR trajectory.