Rupee Erases 2025 Losses Amid Strong Dollar Inflows
The Indian rupee has rebounded strongly, wiping out all its losses for the year 2025. On Monday, the rupee surged to a session high of 85.50 before settling at 85.6350 against the U.S. dollar, registering a 0.4% gain for the day. This recovery has been primarily driven by sustained dollar inflows from foreign financial institutions, giving a considerable boost to the domestic currency.
Nine-Day Rally Driven by Corporate Inflows
This marks the rupee’s ninth consecutive session of gains, a rally fueled by increased dollar inflows from corporate-related transactions. These include inter-company borrowings and profit repatriation, which typically intensify in March due to the financial year-end. These transactions have significantly contributed to the recent momentum, bolstering the rupee’s position in the forex market.
Foreign Investments Boost Currency and Equity Markets
Adding to the rupee’s strength has been the continued interest of foreign investors in Indian bonds and equities. In March alone, Indian debt markets have attracted nearly $3 billion in foreign investments. Additionally, equity inflows have seen a notable uptick in recent days. These developments have also propelled equity indices, with the benchmark Nifty 50 surging nearly 1.5% on Monday, reversing its losses for the year.
Market Dynamics and Future Outlook
Market experts have observed limited intervention from the Reserve Bank of India, allowing natural market forces to support the rupee’s appreciation. The unexpected strength has prompted exporters to offload dollars, further boosting the domestic currency. However, analysts caution that the rally may face resistance near the 85.15–85.20 levels, as importers may look to hedge by buying dollars at those rates.
Additionally, global developments such as upcoming U.S. tariff changes could introduce fresh volatility in the currency market, potentially influencing the rupee’s trajectory in the weeks ahead.
The rupee’s recent rally underscores the impact of foreign capital flows, corporate financial activity, and market sentiment on currency performance, reinforcing the dynamic nature of India’s integration with global financial systems.
