Indian Rupee Surges: Understanding the Drivers Behind ₹86.17 Against the US Dollar

In early trading on Friday, April 11, 2025, the Indian Rupee (INR) demonstrated significant strength, appreciating by 51 paise to reach ₹86.17 against the US Dollar (USD). This notable movement marked the rupee's strongest weekly gain in two years, underscoring a shift in currency market dynamics.

Key Factors Influencing Rupee Appreciation

The upward trajectory of the rupee can be attributed to several interconnected factors:

• Weakening US Dollar: A primary driver was the observed weakening of the US Dollar Index (DXY). The DXY, which measures the dollar's performance against a basket of major global currencies, fell by 0.81% to 100.04. This decline was partly fueled by waning confidence in the US economic outlook, prompting a reallocation of capital towards perceived safe-haven assets.
• Declining Oil Prices: Global oil benchmarks also experienced a slight dip. Brent crude futures traded marginally lower at USD 63.16 per barrel. Lower oil prices are generally beneficial for net oil-importing economies like India, reducing the demand for foreign currency (USD) to pay for imports and thereby supporting the rupee.
• Domestic Equity Market Performance: The Indian equity markets exhibited robust performance. The benchmark BSE Sensex opened with substantial gains, surging by 988.34 points (1.34%) to 74,835.49. Similarly, the Nifty 50 index climbed 296.25 points (1.32%) to 22,695.40. Strong domestic market sentiment can attract foreign investment, which in turn increases the demand for the rupee.

Market Expert Outlook

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, suggested that the rupee was likely to trade within a consolidated range of ₹86.00 to ₹86.60 against the US dollar during the trading session. This indicates an expectation of relative stability following the recent appreciation.

Foreign Institutional Investor (FII) Activity

On Wednesday, preceding this rupee surge, foreign institutional investors (FIIs) were net sellers in the Indian equity market, offloading equities worth ₹4,358.02 crore. While this indicates a short-term outflow, the broader currency movement suggests other macro factors are currently outweighing FII selling pressure.

Leveraging Data for Informed Decisions

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Disclaimer: This content is for educational purposes only and does not constitute investment advice. Securities and investment decisions should be made with professional guidance and thorough research.