If the dollar remains below 104 and FII inflows continue, the rupee could inch towards the 85.00 zone this week, hint experts
With foreign institutional investors (FIIs) back in the stock market with purchase orders, the rupee appreciated 34 paise to close at 85.63 against the US dollar on Monday, wiping off all its losses in 2025 amid the bullish trend in domestic equity markets.
After selling Rs 1.39 lakh crore worth of stocks since January this year, FIIs, which were on a selling spree in the last four months, bought stocks worth Rs 3,055 crore on Monday, Rs 7,470 crore on March 21 and Rs 3,239 crore on March 20, taking the total FII inflows to over Rs 13,500 crore in the last three days.
On Friday, the rupee appreciated 38 paise to close at 85.98 against the US dollar. This is the seventh straight session of gain for the rupee, during which it has added 157 paise. The local currency, which hit a low of 87.95 recently, has now risen by 2.63 per cent and recovered all its losses for 2025.
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Weak global crude price levels and continuing weakness in the US dollar also boosted the sentiment. The rupee opened at 85.93, then touched an intraday high of 85.49 and a low of 86.01 against the greenback. The unit ended the session at 85.63, registering a gain of 34 paise from its previous closing level, supported by the 1.40 per cent rise in stock market indices. If the rupee appreciates further, FIIs are expected to step up their purchases in the stock market.
On December 31, 2024, the rupee closed at 85.64 against the greenback.
“The rupee traded positive, driven by strong FII buying over the last few days, which has reversed the fund flow impact on the rupee. The rupee strengthened past 85.70 as the dollar struggled to stay above 104. Additionally, expectations of Russia-Ukraine truce talks have kept market liquidity active, further supporting the rupee’s momentum,” said Jateen Trivedi, Research Analyst – Commodity and Currency, LKP Securities.
If the dollar remains below 104 and FII inflows continue, the rupee could inch towards the 85.00 zone this week, he said.
In the near term, the spot USD-INR is having support at 85.20 and resistance at 86.05, analysts noted. “Uncertainty surrounding Trump’s policies has heightened volatility in the forex market this year. Additionally, the decline in US Treasury yields has contributed to the weakening of the dollar in recent days,” said Dilip Parmar, Research Analyst, HDFC Securities.
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Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent lower at 103.99. Brent crude, the global oil benchmark, rose 0.54 per cent to USD 72.55 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex surged 1078.87 points, or 1.40 per cent, to settle at 77,984.38, while the Nifty advanced 307.95 points, or 1.32 per cent, to close at 23,658.35 points.
Meanwhile, the country’s forex reserves increased by $ 305 million to $ 654.271 billion during the week ended March 14, the RBI said on Friday. In the previous reporting week, the overall reserves rose by $ 15.267 billion to $ 653.966 billion and registered the sharpest weekly rise in two years. The spike in foreign reserves was partly attributed to the $ 10 billion forex swap done by the Reserve Bank of India.
