Indian Rupee Strengthens for Third Straight Session, Opens 16 Paise Higher at ₹85.61

The Indian Rupee continued its upward trajectory for the third consecutive session on Wednesday, April 16, 2025, opening 16 paise stronger at ₹85.61 against the US Dollar. This marks a significant improvement from its previous close of ₹85.77, reflecting positive sentiment driven by stabilising global cues and domestic factors.

Factors Driving the Rupee's Strength

Dollar Weakness: The US Dollar Index (DXY), which measures the greenback’s strength against a basket of major currencies, softened amid mixed economic data from the United States. This decline in dollar strength provided support for emerging market currencies, including the Indian Rupee.

Crude Oil Price Stability: Global crude oil prices remained steady, with Brent crude trading near $64.58 per barrel. WTI crude oil futures traded around $61 per barrel on Wednesday, remaining relatively near a four-year low. As India is a net importer of crude oil, stable prices reduce import costs and support the rupee’s value.

Foreign Fund Inflows: Foreign Institutional Investors (FIIs) have turned net buyers in Indian equities over the past few sessions, further boosting demand for the rupee. Positive domestic earnings reports and improving macroeconomic indicators have attracted foreign capital. On April 15, 2025, FIIs made a net equity purchase of ₹6,065.78 crore, marking their highest single-day inflow since March 27. While FIIs were net buyers, DIIs booked profits and turned net sellers, offloading shares worth ₹1,951.60 crore.

Market Performance

The rupee’s appreciation comes amid a cautious but optimistic outlook for global markets. Asian indices traded mixed, while Indian equity markets opened higher, reflecting improved sentiment among investors. Analysts believe that the rupee could test resistance levels near ₹85.50 in the near term if supportive factors persist.

Outlook and Implications

The strengthening rupee is expected to benefit sectors reliant on imports, such as energy and chemicals, as it reduces input costs. However, exporters may face margin pressures due to reduced competitiveness in global markets. The Reserve Bank of India (RBI) is likely to monitor currency movements closely to ensure stability amid ongoing geopolitical uncertainties and fluctuating trade dynamics.

Conclusion

The Indian Rupee’s consistent gains highlights improving investor confidence and favourable external conditions. While short-term volatility remains possible due to global factors, India’s strong economic fundamentals and foreign fund inflows provide a solid foundation for sustained currency stability. Investors and businesses will continue to watch key developments in crude oil prices and US economic data for further cues on currency movement.

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