Rupee Holds Ground at 85.13/$ After Five-Day Rally Amid Dollar Weakness

By siliconindia  |  Tuesday, 22 April 2025, 10:31:36 AM IST

Rupee Holds Ground at 85.13/$ After Five-Day Rally Amid Dollar Weakness
The Indian rupee opened flat at 85.13 against the US dollar on Tuesday, posting a marginal gain of one paise from its previous close of 85.14. The movement comes after a notable five-day rally during which the rupee appreciated by Rs 1.56, supported by sustained foreign inflows and a weaker greenback.
The strength in the rupee aligns with ongoing global developments, particularly weakness in the dollar index, which has fallen to its lowest level since April 2022. The index declined 0.19% to 98.08, amid political pressure on the US Federal Reserve and increasing recessionary concerns.
US President Donald Trump’s criticism of Fed Chair Jerome Powell, referring to him as 'Mr. Too Late', has intensified calls for an immediate interest rate cut. Analysts suggest this political interference is undermining the perceived independence of the Federal Reserve, leading to increased investor anxiety and contributing to the dollar's decline.
“Political influences over the Fed and concerns about slowing economic growth are creating downside pressure on the dollar index”, said Amit Pabati, Managing Director at CR Forex Advisors. He added that the index is expected to find support near 98.00 and resistance at 99.50.
On the domestic front, foreign portfolio investors (FPIs) continued to show confidence in Indian equities, purchasing Rs 1,970.17 crore worth of stocks on Monday alone. Over the past four sessions, total FPI inflows have crossed Rs 16,600 crore, providing a buffer for the rupee.
In a positive move for Indian banks, the Reserve Bank of India (RBI) introduced a 2.5% additional run-off factor for retail deposits linked to internet and mobile banking, enhancing liquidity risk management frameworks.
Despite the recent strength, the rupee is expected to remain within a narrow trading range of 85.00 to 85.50 in the near term. “Some short covering in the dollar could push the rupee slightly lower”, said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors. He advised exporters to delay hedging while recommending near-term coverage for importers.
Meanwhile, crude oil prices edged lower, with Brent at $66.58 per barrel and WTI at $63.73, as markets react to concerns about global energy demand amid economic uncertainty.

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