Indian central bank steps up rupee support, soaring NRI deposits bolster firepower

Business Recorder reported that the Reserve Bank of India has increased its support for the rupee in recent sessions, cushioning the currency against higher oil prices and rising US Treasury yields. A large inflow of deposits from non-resident Indians has widened the central bank's room to intervene. The rupee has climbed past 95 per dollar to a two-month high, a move many traders did not expect given the pressures it faces.

Brent crude is up 7 per cent for the week, trading at $95.50 a barrel, while the 10-year US Treasury yield has reached its highest point in almost three years. The dollar index is also nearing 100. Bankers said the RBI has repeatedly sold dollars and has been active before the formal market opening across the last three sessions.

Economists quoted in the report think the central bank wants to shield the rupee from oil-driven pressure. A treasury official at a private bank, speaking anonymously, said the aim may be to challenge the view of a one-way decline. Overseas Indian deposits passed $100 billion ahead of the August 31 swap deadline, according to a media report, while FX reserves hit a record $729.3 billion in the week to August 21.