Rupee v/s Dollar, March 13, 2025: Appreciates 19 paise to ₹87.03

The rupee appreciated by 19 paise to ₹87.03 against the US dollar in early trade on Thursday, March 13, 2025. This appreciation was attributed to favourable macroeconomic data and a buying rush in domestic equity markets. At the interbank foreign exchange, the rupee opened stronger at ₹87.13 and settled at ₹87.03 against the greenback. This marked a significant gain of 19 paise from its previous closing level.

Previous Rupee Movements

On the preceding Wednesday, the rupee settled 1 paisa lower at ₹87.22 against the US dollar. This followed a recovery of 10 paise on Tuesday, which partially offset a steep loss of 36 paise in the session before that (Monday).

Factors Influencing Rupee's Strength

Several factors influenced the rupee's performance. Forex analysts noted that escalated tariff tensions worldwide continued to fuel foreign capital outflow. However, a weaker American currency index and lower crude oil prices provided strength to the local unit. The dollar index, which measures the US dollar's strength against six other currencies, was trading lower by 0.01 per cent at 103.57. Brent crude, the global oil benchmark, traded 0.01 per cent lower at USD 70.90 per barrel in futures trade.

Domestic Economic Data

Favourable macroeconomic data contributed to the rupee's appreciation. The latest government data, released on Wednesday, showed that India's Consumer Price Index (CPI)-based retail inflation slipped to a seven-month low of 3.61 per cent in February due to easing prices of vegetables, eggs, and other protein-rich items. This low inflation rate created space for the RBI to consider another cut in the interest rate next month. Additionally, data from the National Statistics Office (NSO) revealed that the growth in the Index of Industrial Production (IIP) accelerated to 5 per cent in January 2025, driven by a rebound in manufacturing activity.

Domestic Equity Market Performance and Foreign Investment

The domestic equity market traded positively. The 30-share BSE Sensex rose by 23.47 points or 0.03 per cent to 74,053.23, and the broader Nifty gained 16.95 points, or 0.08 per cent, to 22,487.45. However, foreign institutional investors (FIIs) offloaded equities worth ₹1,627.61 crore on a net basis on Wednesday, according to exchange data.

Global Tariff Tensions

Escalated tariff tensions worldwide were noted as a factor influencing foreign capital outflow. President Donald Trump had increased tariffs on all steel and aluminum imports to 25 per cent, aiming to reclaim wealth he believed was "stolen" by other nations. This action led to retaliatory measures from other countries. Canada imposed stiff taxes on a range of US products, including textiles, water heaters, beef, and bourbon, and also announced 25 per cent reciprocal tariffs on steel products and increased taxes on other items like tools, computers, servers, and sports equipment. Similarly, the European Union (EU) stated its intention to raise tariffs on American beef, poultry, bourbon, motorcycles, peanut butter, and jeans.

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