However, forex strategists remain cautious, noting that geopolitical tensions with Pakistan and a potential rebound in the US Dollar Index could reverse the rupee’s recent momentum.
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PRIYANSHU SINGH
The rupee strengthened above the 84 per USD mark on Friday, buoyed by strong foreign portfolio investment in the domestic equity markets and progress in US-India tariff talks.
The rupee opened 39 paise stronger at 84.10 per US Dollar, compared to its previous close of 84.49. Gaining further ground against the greenback, the rupee appreciated below the 84 mark and is currently trading at 83.93. In the trading so far, it hit a hit/low of 83.7725/84.10.
The rupee closed 76 paise stronger on Wednesday at 84.49 per USD, compared to its previous close of 85.25. This was the highest close since November 2024 and the biggest single-day gain in 29 months.
Amit Pabari, MD, CR Forex Advisors, observed that during the previous trading session, the rupee appreciated, closing below 84.50 levels, possibly supported by strong equity and debt inflows. The rupee was further buoyed by positive comments from Trump on U.S.-India tariff talks, suggesting a potential deal could be in the works.
Additionally, broader Asian currency strength, with regional peers rallying up to 0.8%, provided a tailwind.
“The Rupee’s 2% rise in March marked its best performance since November 2018, aided by a weaker US dollar outlook. However, caution persists amid ongoing geopolitical risks—particularly tensions with Pakistan over Kashmir —which could spark rupee volatility.
“At the same time, the Dollar Index (DXY) has found support at 98 and may rebound toward 102 on the back of renewed trade optimism. A continued dollar rally could weigh on the rupee, limiting its recent gains and reintroducing near-term instability,” he said.
Abhishek Goenka, Founder and CEO of India Forex Asset Management, noted that FPI Dollar selling caused the USDINR pair to break the recent 84.95 low, and thereafter, some stops were triggered. Also, the RBI does not seem to be buying dollars too aggressively.
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Published on May 2, 2025
