The Indian rupee closed the week firmer against the US dollar, extending gains after banks mobilised a record $127.23 billion through the Reserve Bank of India's special Foreign Currency Non-Resident (FCNR-B) deposit programme. The currency traded near its strongest level in 10 weeks after settling at 94.59 on Friday.

The RBI launched the concessional FCNR-B window earlier in the year to attract dollar inflows from non-resident Indians and shore up foreign exchange reserves. Bankers said subscriptions exceeded expectations, providing the central bank with a durable source of foreign capital that reduced the need for aggressive spot-market intervention.

Traders at Mumbai-based dealing desks said the inflows had improved dollar liquidity and dampened volatility in the currency, which had come under pressure earlier in the year from higher US tariffs on Indian exports and persistent portfolio outflows. The programme's maturity profile locks in funds for several years, giving policymakers greater flexibility.

A Reserve Bank of India spokesperson said the deposit scheme had strengthened the country's external buffers, with foreign exchange reserves expected to rise in the weekly data. Economists at ICICI Bank and HDFC Bank said the rupee could consolidate near current levels if global dollar strength eased and crude oil prices remained contained.

Market participants cautioned that the rupee's near-term path would still depend on US Federal Reserve policy and the trajectory of India's trade deficit, but said the record deposit haul had materially reduced downside risks for the currency in the months ahead.