Rupee Strengthens Against Dollar as RBI Eases FPI Investment Rules

The Indian rupee has strengthened against the US dollar, reaching 95.24, following the Reserve Bank of India's recent policy changes that eased foreign portfolio investment regulations. This move has bolstered investor confidence, with the RBI maintaining interest rates amid rising energy prices and supply chain issues. The central bank also revised its GDP growth and inflation projections, indicating a cautious outlook for the economy. As the dollar index remains stable, the domestic equity market has shown mixed results, reflecting ongoing market dynamics. Read on for more insights into the RBI's latest monetary policy and its implications for the Indian economy.

By Narendra Chaudhary Jun 5, 2026, 11:38 IST

Rupee Gains Ground Following RBI Policy Changes

In Mumbai, the Indian rupee gained 50 paise, reaching 95.24 against the US dollar on Friday, following the Reserve Bank of India's (RBI) decision to relax foreign portfolio investment (FPI) regulations for government securities.

Forex market analysts noted that the RBI's announcements positively influenced investor confidence, especially as the central bank emphasized that the nation's foreign exchange reserves are robust enough to withstand external pressures.

The rupee began trading at 95.72 in the interbank foreign exchange market and climbed to 95.24 during the day, marking a 50 paise increase from the previous closing rate.

On Thursday, the rupee had also appreciated slightly, closing at 95.74 against the dollar.

The RBI maintained its interest rates for the second consecutive time, opting to keep the repo rate steady at 5.25 percent, as it assessed the implications of escalating energy costs and supply chain disruptions linked to the West Asia crisis.

During the announcement of the second bi-monthly monetary policy for the fiscal year, RBI Governor Sanjay Malhotra stated that the Monetary Policy Committee (MPC) unanimously agreed to maintain a neutral stance.

Additionally, the RBI has increased the investment limits for Non-Resident Indians and Overseas Citizens of India in equity markets.

Malhotra reiterated that the central bank's approach to the exchange rate remains unchanged, clarifying that it does not aim for a specific rate or band for the rupee.

In related news, the dollar index, which measures the dollar's performance against a basket of six currencies, was trading at 99.40, reflecting a slight increase of 0.01 percent.

Brent crude oil prices rose by 0.36 percent, reaching USD 95.37 per barrel in futures trading.

On the domestic stock market, the Sensex dropped by 142.06 points, or 0.19 percent, settling at 74,217.95, while the Nifty fell by 38.75 points, or 0.17 percent, to 23,377.80.

Data from the exchange indicated that foreign institutional investors sold equities worth Rs 4,447.06 crore on a net basis on Thursday.

Furthermore, the RBI has revised its GDP growth forecast down to 6.6 percent from the previous estimate of 6.9 percent for the current fiscal year, while raising the Consumer Price Index (CPI) inflation projection to 5.1 percent for FY27, up from an earlier estimate of 4.6 percent.