The rupee rose to a peak of 85.50 during the session, strengthening past levels last seen at the end of 2024.
The currency closed at 85.6350 against the U.S. dollar, up 0.4% on the day.
A nine-day streak of gains has boosted the rupee, as the currency benefited from dollar inflows related to inter-company borrowings and repatriation of corporate profits, which are usual in March, the last month of India’s financial year.
Inflows into Indian bonds – about $3 billion over March so far – and a pickup in foreign buying of Indian stocks over the last couple of trading sessions have also helped the currency, which was teetering near record-low levels as recently as last month.
On the day, “offers (on USD/INR) were dominated by foreign banks but what is also surprising is that the Reserve Bank of India doesn’t seem to be very active on bid,” a trader at Mumbai-based bank said. The sharp gain in the rupee also likely took exporters by surprise, prompting dollar sales and adding to the momentum, the trader said. The currency is up 2.1% on the month so far, outpacing all of its major Asian peers. The benchmark Indian equity index, Nifty 50, rose nearly 1.5% on Monday, also wiping out all of its losses seen over 2025.
The rupee could extend its gains a little more but that is likely to be capped around 85.15-85.20 as importers may jump in to pick up dollars at a bargain, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
While the local unit has logged a string of gains recently, some analysts reckon that the rally is underpricing India’s vulnerability to reciprocal U.S. tariffs, slated to be introduced on April 2.
