The rupee appreciated 81 paise to close at 94.93 (provisional) against the U.S. dollar on Friday (June 5, 2026) after the Reserve Bank announced measures to support foreign capital inflows and strengthen forex liquidity.

Forex traders said the announcements in the Reserve Bank of India (RBI) policy boosted investor sentiments after the apex bank asserted that the country’s forex reserves provide a sufficient buffer against external shocks. The Reserve Bank on Friday (June 5, 2026) expectedly kept interest rates unchanged for the second time in a row as it weighed the impact of rising energy prices and supply disruptions caused by the West Asia crisis.

At the interbank foreign exchange market, the rupee opened at 95.72, then touched an intraday high of 94.89 and finally ended the session at 94.93 (provisional), registering a rise of 81 paise from its previous close. On Thursday (June 4, 2026), the rupee rose 2 paise to settle at 95.74 against the U.S. dollar.

Announcing the second bi-monthly monetary policy for the current fiscal, RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) has unanimously decided to retain the short-term lending rate or repo rate at 5.25% with a neutral stance.

“By holding the repo rate at 5.25% with a neutral stance even while raising the FY27 inflation forecast by 50 basis points to 5.1%, the RBI has drawn a clean line: the rate instrument is reserved for inflation, and the rupee will be defended through the capital account,” said Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities.

The expansion of the Fully Accessible Route to all new 15-, 30- and 40-year G-Sec issuances, the removal of Foreign Portfolio Investment (FPI) concentration limits, the extension of Foreign Currency Non-Resident (Bank) (FCNR(B)) hedging support, the Public Sector Undertaking (PSU) External Commercial Borrowing (ECB) swap window, and the restoration of the export realisation period to nine months together amount to the most comprehensive dollar-mobilisation effort since 2013, Mr. Banerjee added.

The Centre’s simultaneous removal of taxes on foreign investment in Government Securities (G-Secs) is the force multiplier, as it addresses the single biggest friction flagged by global bond funds and index providers.

“We see this as constructive for the long end of the G-Sec curve. On the currency, these measures can aid the rupee’s appreciation over the near term, provided oil prices stay below $100 a barrel.

“We see scope for the rupee to appreciate towards 94 to 94.5 on spot over the near term, with the upside in USD-INR now capped around the 96 mark. Any appreciation beyond 94 would depend on the actual quantum of dollar mobilisation through these newly announced routes and the trajectory of oil prices,” Mr. Banerjee said.

Reserve Bank governor said the forex reserve stood at a healthy $682.3 billion, adequate to provide import cover for about 11 months. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.22, lower by 0.19%. Brent crude, the global oil benchmark, was trading down 0.29% at $94.75 per barrel in futures trade.

On the domestic equity market front, Sensex declined 116.67 points to settle at 74,243.34, while the Nifty fell 49.85 points to 23,366.70. Foreign institutional investors offloaded equities worth ₹4,447.06 crore on a net basis on Thursday (June 4, 2026), according to exchange data. Meanwhile, RBI has lowered GDP growth projection to 6.6% from 6.9% earlier for the current fiscal and raised Consumer Price Index (CPI) inflation projection to 5.1% for FY27, higher from the earlier estimate of 4.6%.

The rupee appreciated 11 paise to 95.63 against the U.S. dollar in early trade on Friday (June 5, 2026), as market participants wait for the RBI policy decision, while there has also been encouraging news from the India-US trade discussions.

Forex traders said the 96.00 zone remains a strong resistance area for USD/INR and if the RBI signals a cautious approach toward inflation and currency stability in its policy decision, the rupee could gradually move back towards the 95.00-95.20 region in the near term.

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At the interbank foreign exchange market, the rupee opened at 95.72, then touched 95.63 in initial trade, registering a rise of 11 paise from its previous close.

On Thursday (June 4, 2026), the rupee rose 2 paise to settle at 95.74 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.41, higher by 0.01%.

Brent crude, the global oil benchmark, was trading up 0.40% at $95.41 per barrel in futures trade.

Market participants are now turning their attention to the Reserve Bank of India’s MPC rate decision on June 5, as inflation, growth and the rupee are under focus, traders said.

“A more cautious RBI stance on inflation would further support debt inflows into India, providing an additional cushion for the rupee,” CR Forex Advisors MD Amit Pabari said.

While markets wait for the RBI, there has also been encouraging news from the India-US trade discussions, Pabari said, adding that with negotiations entering their final day, investors are hopeful that progress on trade could improve sentiment and support future capital inflows into India.

On the domestic equity market front, Sensex climbed 269.93 points to 74,629.94 in opening trade, while the Nifty was up 62.4 points to 23,478.95.

Foreign institutional investors offloaded equities worth ₹4,447.06 crore on a net basis on Thursday (June 4, 2026), according to exchange data.

Meanwhile, U.S. President Donald Trump has said that Prime Minister Narendra Modi is a good friend and expressed confidence that the United States and India would reach a trade agreement.

“We will get to a deal because I like your Prime Minister a lot. He is a good friend of mine. We get along great, and we are gonna make a deal,” Mr. Trump told reporters at the Oval Office on Thursday (June 4, 2026).

Moreover, the U.S. said its strategic partnership with India remains robust and that President Donald Trump’s invitation to Prime Minister Narendra Modi to visit Washington is a “testament” to the “great relationship” between the two leaders as well as the growing ties between the two countries.