Kathmandu— The Indian rupee showed resilience in July, depreciating by only 0.8 percent despite a more than 20 percent surge in global crude oil prices, thanks to robust capital inflows and proactive measures from the Reserve Bank of India (RBI).

Capital Inflows Surge

Foreign portfolio investment (FPI) inflows reached a 22-month high in July, driven by strong equity investments. The total FPI inflow for the month was USD 4.2 billion, with debt inflows also improving. Additionally, RBI's special measures attracted USD 40.8 billion in foreign capital inflows.

RBI Intervenes to Support Currency

The Reserve Bank of India stepped up its intervention in the forex market to support the rupee amid escalating geopolitical tensions and rising oil prices. The central bank's actions, along with a weaker US dollar index (DXY) that declined by 1.3 percent during July, helped stabilize the currency.

Economic Stability Amidst Challenges

Despite a wider merchandise trade deficit, India’s external position remains stable due to strong remittances and a higher services surplus. As of July 24, foreign exchange reserves stood at USD 682.4 billion, sufficient to cover about ten months of imports. This financial cushion provides a buffer against volatility in the currency market.

Looking ahead, Bank of Baroda expects the rupee to trade within the range of 95.25-95.75 per US dollar in the near term, with continued capital inflows and RBI measures likely to limit further weakness.

(With inputs from ANI)

Originally published on abcnews.com.np.