The Rupee continued to strengthen in trading on Thursday as the trade deficit for February 2025 narrowed to a 41-month low of $14 billion and the US Fed maintained its rates. The Indian currency opened 5 paise higher at 86.39 per US Dollar (USD) compared to the previous close of 86.44. It reached a high of 86.20 and a low of 86.4125 in intraday trades, currently trading at 86.3175.
On Wednesday, the Rupee closed about 12 paise higher at 86.44/USD. Amit Pabari, MD, CR Forex Advisors, attributed the Rupee’s strength to strong foreign inflows into debt markets, with India’s real yield at 3.06 percent attracting nearly $496 million in investments since March 17. Additionally, India’s trade deficit narrowing to -$14.05 billion—the lowest since September 2021—and recent economic data indicating industrial production growth and GDP rebound further supported the Rupee.
Despite these positive factors, Pabari warned of risks such as a liquidity shortfall, FII sell-off, and uncertainties related to global tariff policies. He anticipated the USDINR pair to trade between 86.00 and 86.80 in the near term.
In the bond market, the yield of the benchmark 10-year Government Security (6.79 per cent GS 2034) slightly decreased by 2 basis points due to RBI’s liquidity infusion measures. The G-Sec is currently trading at a yield of 6.64 percent.
Overall, the Rupee’s appreciation and bond market movements reflect the ongoing market dynamics, with investors closely monitoring global economic developments and policy decisions.
