The Indian Rupee Opens Lower at ₹85.27 as Dollar Strengthens Amid Global Optimism

The Indian rupee opened lower against the US dollar on 23 April 2025, trading at ₹85.27, reflecting a continuation of recent weakness amid broad dollar strength. This decline follows a resurgence in the US dollar, with the dollar index rising by 1.34% to 99.64. The rupee’s marginal decline from previous levels signals persistent pressure from external factors, notably the appreciating US dollar, which remains the dominant force in global currency markets.

The greenback's strength is attributed to US President Donald Trump's softened stance on the Federal Reserve and indications of easing trade tensions with China, which have reduced recessionary fears and led markets to adjust expectations for aggressive monetary easing by the Fed.

Rupee’s Recent Performance and Outlook

Despite the recent weakness, the rupee has shown resilience relative to some regional peers, supported by India’s relatively low export dependence and limited capital outflows. The currency had previously strengthened to around ₹85 per dollar in April, buoyed by a weaker dollar and inflows into Indian assets. However, renewed dollar strength has offset these gains, pushing the rupee back towards the ₹85.27 mark.

Domestic Economic Factors

On the domestic front, India’s inflation rate has eased to its lowest in over five years, falling well below the Reserve Bank of India’s (RBI) 4% midpoint target. This disinflationary trend provides the RBI with room to focus on growth concerns, as GDP growth moderated to 6.5% in the last financial year from 8.2% previously. The RBI’s cautious stance on interest rates, maintaining them steady amid these dynamics, has so far had limited impact on stemming the rupee’s depreciation.

Oil Prices and Import Costs

As of 10:20 AM, Brent crude oil prices rose by 0.80% to $67.98 per barrel, influenced by new sanctions on Iran. Higher oil prices can exert inflationary pressures on the Indian economy, potentially affecting the rupee's stability. India, being a net importer of crude oil, is sensitive to global oil price fluctuations, which can impact the trade deficit and currency valuation. 

Capital Flows and Market Sentiment

Foreign institutional investors (FIIs) have influenced rupee movements through their trading activity. Despite the rupee's depreciation, foreign portfolio investors continued to inject capital into Indian equities, purchasing stocks worth ₹1,290.43 crore on 22nd April. This marks the fifth consecutive day of net inflows, totaling over ₹17,890 crore over four days. However, these inflows have provided limited support to the rupee amid broader global currency movements.

Technical Levels and Trading Range

Market participants are watching key technical levels closely. The rupee’s near-term support is identified around ₹84.80, with resistance near ₹85.85. Breaching these thresholds could signal further directional moves, with the current trading range reflecting market uncertainty amid competing domestic and external forces.

In summary, the Indian rupee’s recent depreciation to ₹85.27 against the US dollar reflects the prevailing strength of the dollar amid robust US economic data and monetary policy expectations. While domestic factors such as easing inflation and moderated growth provide some stability, external pressures from dollar appreciation and global uncertainties continue to dominate. 

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