Upgrade of India’s rating by S&P Global Ratings last week has whetted FPIs’ investment appetite for Indian equities.
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The rupee recorded its biggest single-day gain in over a month, strengthening below the 87 mark on Tuesday, as foreign portfolio investors (FPIs) stepped up buying in the Indian equity market amid expectation that the US may have a re-think on additional levies on India’s exports to that country.
The rupee appreciated 40 paise to close at 86.95 per dollar against the previous close of 87.35.
The FPI buying action in the equity market came on the hopes that the US may revisit its decision to impose an additional 25 per cent levy on India’s exports to it in the wake of US-Russia talks, which have also sparked optimism for a ceasefire in the Ukraine-Russia war.
Further, upgrade of India’s rating by S&P Global Ratings last week has whetted FPIs’ investment appetite for Indian equities.
Rates and Russia
India, in its national interest, has been buying relatively cheaper crude oil from Russia. However, US President Donald Trump wants India to stop altogether as Russia continues to be at war with Ukraine.
During the US-Russia bilateral talks, Russian President Putin highlighted that US-Russia trade increased by 20 per cent since Trump came to power.
Dilip Parmar, Senior Research Analyst, HDFC Securities, observed that the rupee outperformed other Asian currencies due to risk-on sentiments.
“The government’s focus on growth-oriented policies and a recent credit rating upgrade by a foreign rating agency have bolstered confidence in the Indian economy.
“This positive momentum is further supported by the resumption of foreign fund buying, which, along with a technical pullback, has strengthened the rupee against the dollar,” he said.
Parmar expects the spot dollar/rupee exchange rate in the near term to find support at 86.80 and face resistance at 87.20.
Published on August 19, 2025
