Rupee hits near three-month high, erases almost all 2025 losses

The domestic currency was the best-performing currency among its Asian peers in the current month so far

The rupee gained for the ninth consecutive trading session on Monday to close at a nearly three-month high, on the back of persistent dollar sales from foreign banks, erasing almost all the losses incurred during 2025.

 

The local currency appreciated up to 85.49 per dollar during the day, the highest since December 30, 2024, before settling at 85.64 per dollar, against the previous close of 85.98 per dollar.

 

The domestic currency, which appreciated by 2.19 per cent in March so far, was the best-performing currency among its Asian peers in the current month. However, the rupee has depreciated by 2.61 per cent in the current financial year, whereas it has seen 0.03 per cent depreciation in the current calendar year.

 

 

“This strength was supported by sustained foreign inflows, strong corporate repatriations ahead of the financial year-end, and persistent dollar selling by foreign banks,” said Abhishek Goenka, founder and chief executive officer of India Forex & Asset Management (IFA Global).

 

“Adding to the positive sentiment, the Reserve Bank of India’s $10 billion forex swap auction saw bids more than double the offer size, with a cut-off premium of ₹5.86,” he added.

 

The RBI received bids worth $22.28 billion at the USD/INR buy-sell swap auction, against the notified amount of $10 billion.

 

The RBI’s outstanding net short dollar position in the forward market rose further to $77.5 billion by the end of January, against $67.9 billion at the end of December, latest data showed.

 

“The forward positions could have increased further after the swap auctions we saw in February and March. But I don’t think it would have touched $100 billion, but somewhere around $90 billion-$95 billion,” said a dealer at a state-owned bank.

 

Market participants said unwinding of speculative long-dollar positions further aided the rupee. “There were some directions from the RBI in the previous week, following which people are unwinding their position,” said a dealer at a private bank.

 

Market participants said the rupee would continue to strengthen against the US dollar until the end of the current financial year. However, it may begin to weaken once foreign investors are expected to pull out of domestic markets with the start of the new financial year. The RBI may also settle offshore forward contracts maturing in April.

 

Furthermore, the imposition of reciprocal tariffs by the US starting April 2 could add downward pressure on the rupee. “The 85.50 per dollar level will hold, because it is the end of the month, quarter, and year, when the currency usually strengthens,” said Amit Pabari, MD, CR Forex.

 

“But FPIs are expected to pull out from April, we also have reciprocal tariff expectations, and some maturities of swap. This will take the rupee to around 86.50 per dollar,” he added.