Rupee’s early September rally fades as oil prices surge, RBI says

The Reserve Bank of India’s monthly bulletin reports that the rupee’s early-September appreciation, driven by $133 billion of FCNR(B) deposits mobilised after the central bank’s concessional swap window opened in June, was erased in the latter half of the month as crude oil prices jumped. The swap scheme was shut down a month ahead of its planned September 30 deadline. In September the rupee depreciated roughly 0.7 % and has fallen about 5 % since the West Asia war began in late February, according to Deputy Governor Poonam Gupta’s commentary.

The influx of FCNR(B) funds created surplus liquidity in August, which moderated in September to Rs 4.27 trillion amid tax outflows and RBI’s liquidity measures. Headline inflation rose to 4.8 % in August, driven by food, beverages, fuel and core components, while core inflation also increased. Despite external pressures, the economy posted strong Q1 2026-27 growth, and July saw net FDI reach $7.4 billion, the highest in five years, with most equity inflows going to communication, financial and computer services and sourced mainly from Mauritius, the UAE and the United States.