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Rupee At 7-Month High of 83.76 Against US Dollar: The rupee has been supported by sustained foreign fund inflows and stronger domestic data, according to forex traders.
The rupee’s 2 per cent rise in March marked its best performance since November 2018, aided by a weaker US dollar outlook, says CR Forex Advisors MD Amit Pabari.
Continuing its upward movement, the rupee on Friday surged 78 paise to hit its seven-month high level of 83.76 against the US dollar in the morning trade. With this, the rupee has wiped out all losses since Donald Trump won the US presidential elections in November 2024. According to forex traders, the rupee has been supported by sustained foreign fund inflows and stronger domestic macroeconomic data.
At the interbank foreign exchange, the rupee opened at 83.98 against the greenback, then gained ground and touched 83.76, registering a gain of 78 paise over its previous close. On Wednesday, the rupee surged 42 paise to 84.54 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.27 per cent at 99.97.
Brent crude, the global oil benchmark, rose 0.55 per cent to $62.45 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex advanced 722.82 points or 0.90 per cent to 80,965.06, while the Nifty rose 203.70 points or 0.84 per cent to 24,537.90.
Foreign institutional investors (FIIs) bought equities worth Rs 50.57 crore on a net basis on Wednesday, according to exchange data.
In February, the rupee fell to an all-time low of 87.95 in February amid uncertainty over Trump’s tariff policies. However, it recovered sharply in March and April on the back of portfolio inflows and hopes that India will be one of the first to sign a trade deal with the US.
Why Is Rupee Rising?
According to analysts, GST collections for April were robust at Rs 2.37 lakh crore, an all-time high, reflecting the health of domestic demand. Moreover, a positive trend in domestic equities driven by foreign fund inflows further boosted sentiments.
“The rupee’s 2 per cent rise in March marked its best performance since November 2018, aided by a weaker US dollar outlook. However, caution persists amid ongoing geopolitical risks — particularly tensions with Pakistan over Kashmir — which could spark rupee volatility,” CR Forex Advisors MD Amit Pabari said.
At the same time, the Dollar Index (DXY) has found support at 98 and may rebound toward 102 on the back of renewed trade optimism. A continued dollar rally could weigh on the rupee, limiting its recent gains and reintroducing near-term instability, he added.
“We remain positive that India will emerge as one of the key winners under Trump 2.0, as a beneficiary of the next round of supply-chain shifts,” analysts at Nomura said in a note.
However, caution lingers, as they noted any escalation in tensions between India and Pakistan could swiftly reverse gains and pressurise the rupee, much like past geopolitical episodes.
Robust GST Numbers For April
On the domestic macroeconomic front, Goods and Services Tax (GST) collection rose 12.6 per cent Y-o-Y to an all-time high of about Rs 2.37 lakh crore in April, which the government said shows the resilience of the Indian economy and the effectiveness of cooperative federalism.
The gross GST mop-up was Rs 2.10 lakh crore in April 2024 — the second-highest collection ever since GST was rolled out on July 1, 2017. The net mop-up was Rs 1.92 lakh crore.
(With Inputs from Agencies)
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