Rupee gains 50 paise to 85.24 as RBI eases FPI norms, holds repo at 5.25%
Synopsis
The rupee's 50-paise single-session surge on 5 June was no accident — the RBI paired a unanimous rate hold at 5.25% with a sweeping easing of FPI and NRI investment norms, FAR bond expansion, and a concessional forex swap window. With $682 billion in reserves backstopping confidence, the central bank is betting that structural capital-flow reforms can offset a trimmed growth forecast and a higher inflation projection.
Key Takeaways
The Indian rupee gained 50 paise to 85.24 against the US dollar in intraday trade on 5 June .
RBI held the repo rate at 5.25 per cent for the second consecutive meeting, with a unanimous MPC vote and neutral stance.
The central bank eased FPI and NRI/OCI investment norms, expanded the Fully Accessible Route (FAR) for bonds, and announced a temporary FCNR(B) deposit window .
Forex reserves stand at approximately $682 billion , which the RBI cited as a buffer against global uncertainty.
FY27 GDP growth estimate was trimmed to 6.6 per cent from 6.9 per cent ; CPI inflation projection raised to 5.1 per cent from 4.6 per cent .
Brent crude traded at $95.37 per barrel , up 0.36 per cent , adding to inflation risk.
The Indian rupee surged 50 paise to 85.24 against the US dollar in intraday trade on Friday, 5 June, after the Reserve Bank of India (RBI) eased investment norms for foreign portfolio investors and unveiled a package of measures to bolster capital inflows. The domestic currency had opened at 85.72 in the interbank foreign exchange market and settled at 85.74 in the previous session.
RBI Policy Decision
Announcing the second bi-monthly monetary policy of FY27, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) unanimously decided to hold the repo rate at 5.25 per cent while maintaining a neutral policy stance — the second consecutive meeting at which rates were left unchanged. Malhotra also reiterated that the RBI does not target any specific level or trading band for the rupee, and that its exchange rate policy remains unchanged.
Key Measures Driving the Rupee Rally
The central bank raised investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments and eased norms governing FPI investments in government securities. According to market experts, additional steps — including expansion of the Fully Accessible Route (FAR) for bonds, relaxed FPI debt investment norms, a temporary FCNR(B) deposit window, and concessional foreign exchange swap facilities — are expected to support the rupee and improve dollar inflows.
Forex Reserves and Inflation Outlook
Experts noted that the RBI's reassurance on adequate forex reserves — currently around $682 billion — helped shore up market confidence. However, the central bank acknowledged headwinds: it revised its FY27 CPI inflation projection higher to 5.1 per cent from the earlier estimate of 4.6 per cent, citing elevated crude oil prices. International benchmark Brent crude traded 0.36 per cent higher at $95.37 per barrel in futures trade on the day.
Growth Estimates Trimmed
The RBI also lowered its FY27 GDP growth estimate to 6.6 per cent from the previous projection of 6.9 per cent, reflecting global uncertainties weighing on the outlook. This comes amid persistent external headwinds, including elevated energy costs and cautious global risk appetite. Notably, the combination of a rate hold and structural easing measures signals the RBI's intent to support growth without abandoning its inflation-management mandate.
What to Watch
The durability of the rupee's gains will depend on whether the eased FPI norms translate into sustained dollar inflows in the coming weeks. Any fresh spike in crude oil prices or a shift in global risk sentiment could cap the currency's upside. Markets will also watch for follow-through guidance on the FCNR(B) window and FAR bond expansion timelines.
Point of View
But open the capital account door wider to attract dollars and defend the rupee. The risk is that the revised inflation forecast of 5.1 per cent leaves little room for future rate cuts, even as the growth estimate has been shaved. Markets are reading the FPI and NRI norm relaxations as the real story, but if crude stays elevated and inflation overshoots, the RBI may find its neutral stance harder to justify. The $682 billion reserve cushion buys time, but it is not a substitute for a credible disinflation path.
NationPress
11 Aug 2026
Frequently Asked Questions
Why did the rupee gain 50 paise on 5 June?
The rupee gained 50 paise to 85.24 on 5 June after the RBI eased investment norms for FPIs and NRIs, expanded the Fully Accessible Route for bonds, and announced concessional forex swap facilities — all measures expected to boost dollar inflows. The central bank's reassurance on $682 billion in forex reserves also improved market sentiment.
What did the RBI decide on the repo rate in June 2025?
The RBI's Monetary Policy Committee unanimously held the repo rate at 5.25 per cent for the second consecutive meeting, maintaining a neutral policy stance. Governor Sanjay Malhotra indicated the decision reflected a balance between managing inflation and supporting growth amid global uncertainties.
What investment norm changes did the RBI announce?
The RBI raised equity investment limits for NRIs and OCIs, eased FPI access to government securities, expanded the Fully Accessible Route for bonds, opened a temporary FCNR(B) deposit window, and introduced concessional foreign exchange swap facilities. These steps are collectively aimed at improving capital inflows and supporting the rupee.
How did the RBI revise its economic projections for FY27?
The RBI lowered its FY27 GDP growth forecast to 6.6 per cent from 6.9 per cent and raised its CPI inflation projection to 5.1 per cent from 4.6 per cent, citing elevated crude oil prices and global uncertainties as key risks.
What is the current level of India's forex reserves?
India's forex reserves stand at approximately $682 billion, according to the RBI. The central bank cited this as a source of stability and a buffer against external shocks, which helped boost investor confidence alongside the policy announcements.
