Since the opening of these two windows, the country had received $12 billion worth of inflows till October 29, RBI Governor Raghuram Rajan had said in a post-monetary-policy conference call for researchers and analysts on Wednesday.
Similarly, in the past two months, the rupee, too, has recouped half its losses since the beginning of the financial year. The Indian currency, depreciating 26.8 per cent in the April-August period, had hit an all-time low of 68.83 a dollar on August 28. Since then, it has recovered 10.3 per cent, though its value against the dollar is still 13.73 per cent lower than that on April 1.
"There has been an inflow of about $1 billion from foreign Institutional Investors (FIIs) in October and we have also seen inflows on the back of FCNR (B) deposits. These inflows have helped boost the reserves. The FCNR (B) window will continue till November 30, so an additional of $8-10 billion will come to the market. This window will be kept open till November-end because RBI wants to rebuild the reserves and FII flows are uncertain," said Partha Bhattacharya, deputy CEO, Mecklai Financial.
On Friday, the rupee had fallen marginally to 61.73 a dollar, compared with 61.50 the previous day.
For the future, sentiment on the currency is positive, as the current account deficit is seen narrowing, though it might stay above the central bank's comfort zone of 2.5 per cent of gross domestic product. However, the decision of the US Federal Reserve to taper its bond-buying programme, when it comes, can have adverse impact on emerging-market economies.
"The outlook is bright, at least for the short term. But, we must remember that the US Fed taper is around the corner. The general elections, too, are around the corner. Besides, there also remains a question mark on economic growth. In the medium term, these could cause of relapse of a negative sentiment. RBI is building reserves to prepare for those times; that is good," said G Ananth Narayan, regional co-head (global markets and wholesale banking, South Asia), Standard Chartered Bank.
However, Rajan had on Wednesday expressed confidence and assured the market that India was in a better position to face Fed's tapering. "We are in a better position to face tapering, as and when it occurs," he had said.