Indian Rupee logs best month in over 6 years; Ends FY25 down 2.5%

The Indian Rupee closed the financial year 2025 lower, but saw its best monthly rise in over six years, driven by a weaker dollar and renewed foreign inflows into equities.

 

The domestic currency ended 32 paise stronger at 85.47 against the greenback after closing at 85.79 on Thursday, according to Bloomberg data. The currency has appreciated by 2.39 per cent in March -- the best month since November 2018 -- tracking the fall in the dollar index. Meanwhile, during the current financial year, it witnessed a 2.42 per cent fall. 

 

The rupee rallied sharply driven by strong foreign institutional inflows, which boosted sentiment and supported rupee buyers, according to Jateen Trivedi, VP research analyst - commodity and currency, LKP Securities. "The dollar’s range-bound movement provided additional relief, keeping pressure on the rupee limited." 

 

The dollar remained near a three-week high following Trump’s auto tariff announcement on Thursday. The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.07 per cent at 104.26. The dollar index was down by 3.21 per cent in March, the highest since November 2022. 

 

Despite global headwinds, the rupee’s outlook remains fluid, with potential sources of support emerging, according to Amit Pabari, managing director at CR Forex Advisors. "Robust domestic equity performance and sustained foreign fund inflows could provide a stabilizing effect." Over the past six sessions, foreign investors have pumped over ₹32,488.6 crore into Indian equities. Global funds have pulled out ₹1.24 trillion from domestic stocks so far this year. 

 

Given the current global and domestic market dynamics, the dollar-rupee pair is likely to find strong support in the 85.40-85.50 range, Pabari said. "On the upside, 85.90 will serve as a key resistance level, and a breakout above this could open the path toward 86.40-86.50."

 

The Core PCE Price Index data will be crucial in determining dollar volatility, Trivedi said. "The rupee range is expected between 85.00-85.75, with capital flows and US economic data shaping the next move."

 

Crude oil prices remained on the higher side amid Trump threatening tariffs on countries purchasing oil and gas from Venezuela. Brent crude oil was up 0.20 per cent to $74.18 per barrel, while WTI crude was up 0.17 per cent at 70.04 per barrel as of 3:45 PM IST.