INR: At 85.98/USD, Indian Rupee’s best weekly performance in 2 years
Virendra Pandit
New Delhi: Amid concerns over the ongoing global economic volatility and the potential impact of Trump tariffs, the Indian rupee strengthened significantly, vis-à-vis the US dollar on Friday, logging its best week in more than two years.
The domestic currency closed 39 paise stronger at 85.98 against the greenback after closing at 86.37 on Thursday, according to the media reports.
It closed higher for the eight straight day, and logged the best weekly gains since January 2023. The currency appreciated by 1.78 percent in March so far, tracking the fall in the dollar index.
During the current financial year (FY25), it witnessed a 2.8 percent fall.
The rupee strengthened on fears that US President Donald Trump may say that India manipulates its currency by buying dollars and thus helping its exporters and increasing its reserves, according to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
The rupee has been gaining as FPIs turned net buyers for second time during the week in respect of equity and have been buying heavily into debt, he said.
Foreign Institutional Investors (FIIs) turned net buyers of Rs. 3,239.14 crore from Indian equities on Thursday. Global funds have pulled out Rs. 1.43 trillion from domestic stocks so far this financial year.
The currency saw a sharp rally as FII inflows surged with strong buying figures in recent days. The US Fed’s recent decision to hold rates steady and its forecast for lower interest rates ahead pulled the dollar down, providing significant support to the rupee.
With capital flows improving and dollar weakness persisting, the rupee range has shifted from 86.30 to 85.65, with further movement dependent on global risk sentiment and market flows.
The Indian rupee experienced significant volatility, reacting to the Fed’s meeting while drawing strength from strong FII inflows. It is expected to trade between 86.00 and 86.80 in the near term. With the current global headwinds, a slight rebound towards the 86.50-86.60 range is expected. However, as conditions improve, every uptick could present a selling opportunity, potentially driving the rupee towards the 85.80 level, experts said.
The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was up 0.16 percent at 104.01. It was weakened by 3.4 percent in March, the highest since November 2022. US Fed chief Jerome Powell’s reinforcing the stance that inflationary risks remain a concern causing the dollar index to gain back to 104.13.
Crude oil prices advanced for the second straight day amid geopolitical tensions. Brent crude oil was down 0.21 percent to USD 71.85 per barrel, while WTI crude was up 0.19 percent at 67.94 per barrel as of 3:40 pm, IST.
