The rupee has managed to recover from its losses in the current calendar year, recording continuous appreciation over the last nine trading sessions. This uptrend is attributed to FPI-related inflows into both debt and equity markets, as well as the Dollar’s weakness against other major currencies.
Closing at 85.6350 per US Dollar (USD), the rupee saw a gain of around 35 paise compared to its previous close of 85.98. Since March 11, 2025, when it closed at 87.21, the Indian currency has appreciated by approximately 158 paise.
Amit Pabari, MD of CR Forex Advisors, highlighted that the recent surge in the rupee was driven by strong foreign portfolio inflows, particularly due to the FTSE March review and robust fundraising activities in the market. This included state-run enterprises raising ₹14,000 crore, Indian states securing ₹40,100 crore through debt sales, and NBFCs issuing ₹16,400 crore in bonds. These activities boosted liquidity and investor confidence, supporting the rupee’s appreciation.
Additionally, India’s inflation rate dropped to 3.61%, below the RBI’s 4% target, leading to attractive real yields of 3.06%. This made Indian debt more appealing to foreign investors, resulting in fresh capital inflows. The trade deficit also narrowed to $14.05 billion, the lowest since September 2021, creating an overall trade surplus of $4.5 billion.
V Rama Chandra Reddy, Head of Treasury at Karur Vysya Bank, noted that the rupee had been on a downward trend at the beginning of the financial year, closing at 83.3850 on April 2. Factors such as the US Fed’s rate hikes and Dollar strength had contributed to this depreciation. However, recent FPI inflows into debt and equity markets have reversed this trend, leading to the rupee’s appreciation.
Looking ahead, Pabari suggested that the USD/INR pair may test support at 85.80 in the near term, with a potential rebound pushing it towards 86.50–86.60. If market conditions remain favorable, the rupee could continue its strengthening trend, aiming for levels around 85.20.
