The rupee opened about 22 paise stronger on Monday on the back of a weak Dollar and continued FPI investments in the domestic equity markets, which is on an uptrend.
The Indian unit opened at 85.15 per US Dollar (USD) against previous close of 85.3675. It is currently trading at about 85.10.
The rupee had clocked its best week in a month last week, aided by Dollar’s weakness and investment inflows into domestic equity markets from foreign portfolio investors. It ended last week (on Thursday) about 68 paise stronger.
Facing headwinds
Amit Pabari, MD, CR Forex Advisors, noted that the dollar has been facing sustained pressure, with the Dollar Index (DXY) down over 9 per cent year-to-date. This reflects growing expectations that the Federal Reserve (Fed) may eventually be forced to pivot.
While Fed Chair Jerome Powell has maintained a cautious stance, signalling no immediate rate cuts, mounting political pressure — especially from President Trump — is pushing for lower rates to support growth, he said.
“Given signs of economic softening, markets are indicating that the Fed will have to cut rates sooner rather than later. Such a move would further weigh on the dollar’s strength…. Despite the rupee’s 37.6 per cent depreciation against the dollar over the past decade, exports haven’t picked up meaningfully, and the trade gap with China is at an all-time high,” Pabari noted.
All these developments — from US caution to European rate cuts — are part of a larger shift in how and where investors want to place their money, he added.
Reaping benefits
“With India having strong forex reserves, steady inflation, and competitive interest rates, the rupee is increasingly becoming a beneficiary of this global repositioning,” said Pabari.
“Looking ahead, the USD-INR pair is expected to trade within the 85.00–85.50 range . A decisive break below 85.00 could open the door for further sharp appreciation of the rupee,” per Pabari’s assessment.
Abhishek Goenka, Founder & CEO of India Forex Asset Management, noted that the dollar is trading weaker against majors, with the Dollar Index at 98.70 levels. He noted that the rupee is likely to trade in the 85.05-85.45 per USD range with an appreciating bias.
Published on April 21, 2025
