India’s central bank is exploring ways to pull in more dollar inflows to strengthen foreign exchange reserves and support a weakening rupee. Proposed options include reviving an NRI deposit scheme and cutting withholding tax for overseas investors in government bonds. The discussions come as oil prices rise and capital outflows intensify.
The rupee weakened to 94.86 per USD, trading in a narrow range as modest dollar inflows and easing oil prices offered only partial support. Importers’ active dollar purchases kept downward pressure on the currency, even after oil fell following hints of US support for ships in the Strait of Hormuz. Investors now look to upcoming earnings and economic data for direction.
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