Rupee Strengthens for 10th Straight Session, Opens 4 paise higher at ₹85.59 Against the Dollar

On Tuesday, March 25, 2025, the Indian rupee stayed in the green, as it opened 4 paise higher at ₹85.59 per US dollar vs its previous close of ₹85.63. The local currency has now strengthened for 10 straight sessions, supported by hefty foreign inflows and positive market queues at home.

Key Drivers of Rupee’s Rally

Foreign Institutional Inflows (FIIs): It can be said that the foreign investors reinvesting in India has played a key role in propelling the rupee’s rise. FIIs net bought Indian equities worth ₹3,055.76 crore in Monday’s trade, in what was their first weekly net buying spree in Indian equities in 2023. The dollar inflow has strengthened the currency.

Decline in Dollar Index: The dollar index, which weighs the greenback against a basket of major currencies, was marginally higher by 0.04% at 104.30, but has slumped by 3.25% in March so far, its biggest monthly drop since November 2022. Emerging market currencies, including the rupee, have been boosted by a weaker dollar.

Robust Domestic Fundraising and Bond Issue: Continued strong domestic fund-raising activity and a scheduled borrowing of ₹56,621 crore ($6.61 billion) by Indian states through bond sales have built on the rupees position.

Stock Market Rally: The increase in domestic equity markets has further led to an upward momentum for the rupee. Foreign capital has found its way to Indian equities amid positive sentiment in the stocks and buying at lower levels along with sectoral gains.

Market Dynamics: The rupee has gained 2.2% in March alone, recouping losses from earlier in the financial year when it was down about 2%. In short term, multiple analysts believes this currency will have good supports around ₹85.40- ₹85.50 and resistance could be seen around ₹86.50.

Global Factors and Crude Oil Prices: Brent crude was at $73.05 per barrel (+0.07%), WTI crude at $69.13 per barrel (+0.03%) as of 8:55 AM IST, with prices trading nearly flat. Global risk-on sentiment has also been supported by reports that US President Donald Trump’s tariff actions might be more targeted than previously feared.

Outlook

As long as foreign inflows remain strong and global economic conditions conducive the rupee’s bullish momentum is expected to continue. Traders should be on the lookout for any developments in the realm of crude oil prices and global geopolitical risks, they said, since these could influence future moves in currencies.

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