The Indian Rupee experienced a significant appreciation against the US dollar on Friday, June 5, 2026, gaining 50 paise to trade at 95.24. This positive movement comes after the government announced a crucial exemption for Foreign Institutional Investors (FIIs).
Tax Exemption Fuels Rupee's Rise
The primary catalyst for the rupee's strengthening was the government's decision to exempt FIIs from capital gains tax when they invest in government securities. This strategic move aims to make Indian government bonds more attractive to foreign investors, thereby encouraging greater capital inflows into the market.
Earlier in the day, the currency had already shown signs of recovery, gaining 49 paise from its previous mark of 95.73 as news of the impending tax exemption began to circulate.
Addressing Previous Pressures
The government's initiative is a direct response to the considerable pressure the rupee has faced throughout the year. The Indian currency had fallen by more than 5% since the start of 2026, primarily due to elevated global oil prices and sustained outflows of foreign portfolio investments from Indian equities.
By attracting foreign capital through this tax exemption, the government seeks to alleviate this pressure and stabilize the national currency, supporting broader economic stability.