Rupee appreciates 38 paise to ₹85.06 Mark Amid Dollar weakening and Sliding Oil Prices

The Indian Rupee opened 38 stronger at ₹85.06 per dollar on Friday, 4 April, 2025. This is a gain from its last close of ₹85.44 on Thursday. In initial trading, the Rupee fell past the 85 mark, reaching 84.99 against the dollar, which was the highest level since December 2024. This strengthening occurred as both the dollar index and oil prices dropped sharply amid concerns regarding the impact of US tariffs on the economy. Dollar Index Weakness and Rupee Appreciation

Impact of US Tariffs and Retaliation

The Rupee's strengthening came a day after US President Donald Trump announced tariffs of at least 10 per cent on practically all imports, with higher rates for countries with the largest trade deficits with the US. Analysts from JPMorgan to Bernstein anticipate that these tariffs will increase the risk of recession and inflation in the US. Following this announcement, the US faced international backlash, with Canada announcing 25 per cent retaliatory tariffs on some US-made vehicles, and France’s Emmanuel Macron urging companies to pause US investments .

Concerns over Global Trade Slowdown and Recession

According to Amit Padari, managing director of CR Forex Advisors, the retaliatory tariffs from trading partners could trigger a global trade slowdown, further contributing to recessionary fears. He also noted that the broad-based weakness of the dollar offered relief to emerging market currencies, including the Rupee. Padari anticipates that the dollar-rupee pair is expected to move downwards, with the ₹84.90- ₹85.00 level acting as a strong support and ₹85.60 serving as strong resistance.

Oil Price Drop and Potential Rupee Appreciation

Crude oil prices experienced their worst fall since 2022 due to OPEC's decision to increase output faster than previously announced, combined with the tariff announcement that negatively impacted the economic outlook. Brent crude oil was down by 0.86 percent to $69.54 per barrel as of 9:15 AM IST. Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, suggested that the Indian Rupee could even breach the ₹85.00 level if fund inflows continue and the Reserve Bank of India does not intervene to buy dollars and prevent further appreciation. He believes that a range of ₹85.10 to ₹85.60 is the most likely course for the Rupee today, with risks leaning towards the upside for the dollar-rupee pair.

Conclusion

As short-term volatility will continue for a while, with robust macroeconomic fundamentals and healthy forex reserves, India is cushioned from excessive volatility. Global oil prices and dollar moves will be closely watched by investors and businesses for their impact on the currency ahead.

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