Indian rupee scales 2-month peak as $136bn inflows bolster currency against global risks

Business Recorder reported that the Indian rupee rose to a two-month high on Thursday, opening at 94.30 per dollar against Wednesday's close of 94.97. The gain followed a far bigger than expected haul of $136.4 billion in foreign currency, which the Reserve Bank of India disclosed on Wednesday, drawn through special measures launched in June. Most of that money arrived as non-resident deposits, with smaller sums from external commercial and overseas borrowings.

Foreign exchange reserves have hit a record $729.3 billion and look set to climb further, giving the central bank more ammunition to defend the currency. Nomura said in a note that the jump offers ample firepower even with the forward book standing at a record $137 billion. It also estimates a balance of payments surplus of about $66 billion this fiscal year, compared with a deficit of $23.6 billion a year earlier.

Oil remains the biggest risk for India, according to Kunal Sodhani of Shinhan Bank, as renewed strikes between the US and Iran pushed Brent crude up 7% this week to a level not seen since late July. Expectations of a Federal Reserve rate increase this month, with odds at 2-in-3, have lifted US yields and kept the dollar supported. US 10-year Treasury yields sit close to a near three-year peak.