MUMBAI: Extending its winning streak for the seventh straight session, the rupee appreciated 31 paise to close at 85.67 against the US dollar on Monday, erasing all its losses for 2025. The rally was driven by strong domestic equities, fresh foreign inflows, and a weaker greenback.
Lower crude oil prices and exporters offloading dollars ahead of the financial year-end also bolstered sentiment, traders said. However, risks such as liquidity constraints and reciprocal tariff concerns continue to loom.
At the interbank foreign exchange market, the rupee opened at 85.93, touched an intraday high of 85.49, and hit a low of 86.01 before settling at 85.67—registering a 31-paise gain from its previous close. On Friday, it had strengthened by 38 paise to end at 85.98.
With this, the rupee has gained 154 paise over the past seven sessions, fully recovering from its early-year slide. The unit had ended 2024 at 85.64 against the dollar.
Equities, foreign inflows fuel recovery
“The Indian rupee recouped yearly losses as foreign banks and exporters sold dollars ahead of financial year-end adjustments, while state-run banks remained on the sidelines amid the RBI’s USD/INR swap,” said Dilip Parmar, Research Analyst at HDFC Securities.
He noted that sentiment turned positive ahead of the US representative’s visit to India on April 2 for discussions on reciprocal tariffs. Continued foreign fund buying in domestic equities also supported the currency.
Key Market Drivers
- The dollar index traded 0.09 per cent lower at 103.99.
- Brent crude rose 0.54 per cent to 72.55 dollars per barrel in futures trade.
- Equities surged: The BSE Sensex jumped 1,078.87 points (1.40 per cent) to 77,984.38, while the Nifty climbed 307.95 points (1.32%) to 23,658.35.
- FIIs turned net buyers, purchasing equities worth 7,470.36 crore on Friday, exchange data showed.
Forex reserves strengthen
India’s forex reserves rose by 305 million dollars to 654.271 billion dollars in the week ended March 14, the RBI reported. This followed a sharp 15.267-billion-dollar rise in the previous week—the largest in two years – partly driven by the RBI’s 10-billion-dollar forex swap.
The Indian market has also seen a moderation in foreign portfolio investor (FPI) outflows, which narrowed to 1,794 crore rupees (194 million dollars) last week amid easing global concerns and optimism over a potential de-escalation in the Russia-Ukraine conflict.
With the rupee’s rally intact and market fundamentals improving, traders now see support at 85.20 and resistance at 86.05 in the near term.
