The Indian rupee continued its upward momentum on Friday, gaining strength for the seventh day in a row, even as global headwinds such as firm oil prices and a resilient U.S. dollar persist. Here’s what’s driving the rupee’s rise and what to watch for next.
Rupee Opens Stronger Amid Foreign Inflows
The rupee opened 8 paise stronger at 85.19 against the U.S. dollar, compared to its previous close of 85.27 on Thursday. This extends the domestic currency’s positive trend, logging a 0.24% appreciation so far in the latter half of the month.
Experts attribute this resilience to sustained foreign portfolio investor (FPI) interest in Indian equities. Global funds bought Indian stocks worth ₹8,250.53 crore on Thursday, pushing the seven-day cumulative inflow to over ₹29,450 crore.
Dollar Strength and Trump’s Tone on China
Despite the rupee’s rise, the U.S. dollar remains firm, supported by a slight shift in global sentiment following US President Donald Trump’s softened stance on China. The dollar index, which tracks the dollar against a basket of major currencies, rose 0.22% to 99.6 as of 9:10 AM IST.
Amit Pabari, Managing Director at CR Forex Advisors, noted, “Technically, the dollar index is approaching key levels—support sits at 99.00, while resistance looms at 100.” He added that China is considering suspending some tariffs on US imports, potentially reducing the economic drag from the ongoing trade tensions.
What Analysts Are Watching
Despite strong equity inflows, analysts remain cautious due to geopolitical risks and RBI activity. The Reserve Bank of India is believed to be absorbing inflows by buying dollars near the 85.00 mark to manage volatility.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, said the rupee is expected to trade in the 85.00 to 85.50 range for the day, with an opening at 85.13. “A close watch on RBI is necessary,” he noted, adding that the rupee’s sharp gain from 86.68 to 86.26 the previous day was driven by FPI inflows worth ₹8,000 crore.
Pabari echoed similar caution, stating, “The dollar-rupee pair is expected to find support around 85.20 and resistance at 85.60, with a breakout potentially pushing it toward 85.80.”
Crude Oil Trends May Add Pressure
One key risk for the rupee remains crude oil prices, which edged up in early Friday trade. Brent crude rose 0.53% to $66.90 per barrel, while WTI crude climbed 0.57% to $63.15 per barrel at 9:20 AM IST. Rising oil prices increase India’s import bill, which can weigh on the rupee.
In Summary
- The rupee gained despite a strong dollar and firm oil prices.
- Robust FPI inflows into equities are a major support.
- The RBI’s activity near key levels and geopolitical developments will be critical to watch.
- Near-term rupee movement is expected between 85.00 and 85.60.
While domestic fundamentals remain strong, global market cues and central bank interventions will likely shape the rupee’s path in the coming weeks.
