Rupee hits 5 month high; logs biggest single-day gain in 29 months

10 year govt bond yield fall 23 bps in April

The rupee logged its best single-day gain in nearly two-and-a-half years to close the day on Wednesday at a five-month high amid softening dollar due to US President Donald Trump’s trade policy, and in the absence of the Reserve Bank of India (RBI) in the foreign exchange market.

 

The local unit closed the day at 84.49/$ against 85.25/$ on Tuesday, marking its highest single appreciation in the current calendar year. The local unit was up by 0.9 per cent, the highest since November 11, 2022.

 

After plunging to its all-time low of 87.95/$ on February 10, 2025, the Indian unit staged a remarkable comeback, appreciating 2 per cent in March and 1.16 per cent in April. In 2025 so far, it has gained 1.33 per cent.

 

 

“The Indian rupee witnessed its most significant single-day appreciation since November 2022. This surge can be attributed to month-end adjustments and a technical selloff in the US dollar leading up to the holiday. Despite prevailing geopolitical tensions, trader caution was somewhat offset by the RBI's apparent absence from the market and the strengthening of other Asian currencies, providing support to the rupee,” said Dilip Parmar, senior analyst at HDFC Securities.

 

“Looking ahead in the near term, the spot USDINR pair finds support around the 84.10 level and faces resistance near 85.50. The current bias appears to favour further strengthening of the rupee,” Parmar added. 

 

Owing to dollar-selling by exporters to lock in profits, as well as muted dollar demand from importers who had already hedged their exposure during last month’s rally, the local unit witnessed the steepest single-day rise of 2025. Moreover, traders were optimistic that India would be one of the first countries to strike a trade deal with the US as Trump emphasised on the positive trade talks between the two nations.

 

“Although it is difficult to say whether these levels will sustain, these are the good times for the RBI to buy dollars and shore up their forex reserves,” said a dealer with a foreign bank.

 

Geopolitical tailwind, combined with a weakening US dollar and expectations of a dovish pivot by the Federal Reserve, has brightened the outlook for Asian currencies more broadly.

 

In 2025, some of the Asian currencies which performed better than the rupee are: South Korean Won, Philippines’ Peso, Thai Bhat, and Malaysian Ringgit, among others.

 

“There are multiple reasons which led to the rupee’s rise. First is FPI (foreign portfolio investors) inflows, both in debt and equity markets. Second, the market has started believing the fact that India is close to cutting the trade deal with the US. During the day, stop losses were being triggered below 84.95 levels; and lastly, month-end inflows,” said a trader at a brokerage firm.

 

Dealers said inflows are expected to continue on Friday too. The range for Friday is expected to be 84.25-85.00, with a risk to the downside for the pair. Foreign exchange and money markets will be shut on Thursday on account of Maharashtra Day.

 

Bond yields were largely steady on Wednesday, with the 10-year government bond settling at 6.35 per cent against 6.34 per cent on Tuesday. Traders remained cautious on account of geopolitical tensions between India and Pakistan, said dealers.

 

Government bond yields have fallen 23 basis points (bps) in April on account of liquidity infusion by the central bank, along with 25-bps policy repo rate cut and changing of the stance of the monetary policy to “accommodative”.