India's central bank intervened in the currency market by selling US dollars in both onshore and offshore markets to support the rupee, after the currency weakened 0.2% to 96.4575 rupees per dollar, near the record low of 96.9650 rupees per dollar set in late May. Meanwhile, India's 10-year government bond yield rose 4 basis points to 6.82%. The key pressure came from Brent crude oil prices breaching $90 a barrel after US-Iran tensions escalated. India imports more than two-thirds of its total import value in oil, so higher oil prices increase cost burdens and pressure the current account. Analysts at Barclays said that while measures to attract foreign currency deposits through FCNR accounts have not yet yielded the expected results, inflows are expected to gradually increase over the next two to three months. Barclays estimates that FCNR deposits will bring around $25 billion to $30 billion into India, below market expectations of about $40 billion to $50 billion.
Barclays PLCBarclays analysts quoted on FCNR deposit estimates, but no direct impact on Barclays itself.