March 22, 2025
Location: Mumbai, India
The Indian rupee has shown remarkable strength against the U.S. dollar, achieving its best weekly performance in two years, driven by substantial dollar inflows.Reuters+1Reuters+1
Exchange Rate Movements
On Friday, the rupee appreciated by 0.25% to close at 86.1475 per dollar, marking a weekly gain of 0.72%. This positive momentum continued throughout March, with the rupee strengthening by over 1%, making it the top-performing major Asian currency for the month. ReutersReuters
Factors Influencing the Rupee’s Strength
Key contributors to the rupee’s appreciation include:
- Dollar/Rupee Trades: Foreign banks engaged in significant dollar/rupee transactions, bolstering the rupee’s value. Reuters
- Equity Inflows: Rebalancing of the FTSE All-World Index is expected to bring in approximately $1.5 billion, supporting the rupee despite weaker cues from other Asian currencies. Reuters
- Reserve Bank of India’s (RBI) Actions: The RBI’s upcoming foreign exchange swap is anticipated to enhance liquidity, contributing to the rupee’s strength. Reuters
Outlook
Analysts suggest that the rupee is unlikely to dip below the 86 per dollar mark sustainably, given the current inflows and RBI interventions. However, market participants remain vigilant about global trade policies and economic indicators that could influence currency movements. Reuters
