Indian Rupee strengthens past 86/$, logs best week in over 2 years

The domestic currency closed 39 paise stronger at 85.98 against the greenback after closing at 86.37 on Friday

Indian rupee closed stronger for the eight consecutive session to close below the 86 mark on Friday, amid foreign inflows and weakness in the US Dollar. 

 

The domestic currency closed 39 paise stronger at 85.98 against the greenback after closing at 86.37 on Thursday, according to Bloomberg data. The Rupee closed higher for the eight straight day, and logged the best weekly gains since January 2023. The currency appreciated by 1.78 per cent in March so far, tracking the fall in the dollar index. Meanwhile, during the current financial year, it witnessed a 2.8 per cent fall. 

 

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. 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 turned net buyers of ₹3,239.14 crore from Indian equities on Thursday. Global funds have pulled out ₹1.43 trillion from domestic stocks so far this year. 

 

The currency saw a sharp rally as FII inflows surged with strong buying figures in recent days, according to Jateen Trivedi, VP research analyst, commodity and currency, LKP Securities. "The Fed's 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 shifts to 85.65 to 86.30, with further movement dependent on global risk sentiment and market flows, Trivedi said. 

 

The Indian rupee experienced significant volatility, reacting to the Fed’s meeting while drawing strength from strong FII inflows, according to Amit Pabari, managing director at CR Forex Advisors. "The currency 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, he added.   

 

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was up 0.16 per cent at 104.01. The dollar index was weakened by 3.4 per cent in March, the highest since November 2022. Fed Chair Jerome Powell reinforcing the stance that inflationary risks remain a concern causing the dollar index to gain back to 104.13, Pabari said. 

 

Crude oil prices advanced after for the second straight day as amid geopolitical tensions. Brent crude oil was down 0.21 per cent to $71.85 per barrel, while WTI crude was up 0.19 per cent at 67.94 per barrel as of 3:40 PM IST.