Rupee Opens 9 Paise Higher and Trades Below ₹87, Against US Dollar

On Monday, March 17, 2025, the Indian Rupee opened stronger against the US dollar and was trading below the ₹87 mark. This occurred as the US dollar continued to weaken amidst a reviving domestic economy.

Rupee's Recent Gains

The Indian Rupee's opening was nine paise stronger at ₹86.91 against the US dollar, following its previous close at the ₹87 mark on Thursday. Notably, the Rupee has extended its gains to over 0.7 per cent in March so far. This positive trend follows a period of five consecutive months of decline for the Indian Rupee.

Weakening US Dollar

The dollar index, which measures the value of the US dollar against a basket of foreign currencies, was down by 0.03 per cent. This decline has extended the dollar's monthly fall to over 3.6 per cent, marking its highest monthly fall since November 2022.

Factors Supporting the Rupee

According to Amit Pabari, managing director at CR Forex Advisors, a sharper-than-expected drop in India’s inflation to 3.61 per cent, along with a "stellar" 5 per cent surge in industrial production, has reinforced investor confidence in the rupee. Furthermore, dovish expectations from the Federal Reserve (Fed) are keeping the dollar under pressure, potentially allowing the rupee to extend its gains in the near term. However, Pabari also noted that global risk sentiment and oil price movements will be crucial factors in determining the rupee’s future trajectory.

Crude Oil Prices Rise

Crude oil prices continued their upward trend for the second day. This increase came as China announced its plans to boost consumption by increasing incomes . As of 8:55 AM IST, Brent crude oil was up 0.58 per cent at $70.99 per barrel, and WTI crude was up 0.64 per cent at $67.65 per barrel.

Near-Term Rupee Trading Range and Potential Volatility

Amit Pabari anticipates that the USD/INR pair is likely to trade within the ₹86.80- ₹87.40 range in the near to medium term. He also cautioned that a breakout beyond this range could trigger an additional move of 30-50 paise in the same direction, suggesting potential market volatility.

Increase in India's Forex Reserves

India's Forex reserves recorded their strongest increase in over three years, rising by $15.37 billion to reach $653.97 billion for the week ending March 7th. Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, attributed this increase to the $10 billion swap conducted by the Reserve Bank of India (RBI), along with the higher revaluation of other global currencies. He also mentioned that the domestic currency has been steadily gaining recently, though dollar dips have kept the rupee in a range of ₹86.80 to ₹87.50. Bhansali predicted a potentially higher opening for the rupee at ₹86.94 due to slightly higher equity openings and stronger Asian currencies.

Focus on US Federal Reserve

All eyes are on Jerome Powell this week as he faces the challenge of reassuring investors about the economy's stability while indicating the Fed's readiness to intervene if needed. The Fed is widely expected to maintain steady interest rates during their meeting on March 18-19. However, traders now anticipate a high probability of three rate cuts this year, likely starting in June, according to Bloomberg.

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