The rupee experienced a see-saw movement on Friday, briefly strengthening above the 84 to the dollar mark to hit a six-month peak and later giving up all the gains to end weaker versus the previous close.
The Indian currency, which started the day with a strong gap up opening at 84.09 per dollar against previous close of 84.49, hit a six-month high of 83.7525.
This peak came about on dDollar inflows due to FII investment in the domestic equity markets, weakness of the greenback against major global currencies and likelihood of some headway being made in the US-India tariff talks.
However, the peak level could not be sustained as RBI is believed to have intervened (bought dollars) in the market to curb steep appreciation in the rupee. Importer demand for dollars also pressured the Indian unit.
The Indian currency ended the day at 84.58 per USD, down 9 paise compared with the previous close.
V Ramachandra Reddy, Head-Treasury, Karur Vysya Bank, noted that the RBI’s primary aim is to curb volatile movements on either side.
“So, it ensures that the Indian currency appreciates or depreciates in an orderly manner. If there is a sharp 40-60 paisa appreciation or depreciation, then definitely RBI will intervene,” he said.
Abhishek Goenka Founder & CEO, India Forex Asset Management, observed that the rupee has appreciated significantly against the dollar in recent sessions, momentarily breaching the 84 level for the first time since October 2024.
“This appreciation has been supported by broad-based dollar weakness and robust foreign institutional inflows into domestic equities, which triggered a wave of stop-losses.
“The move was further amplified by the Reserve Bank of India’s limited intervention in absorbing excess dollar supply,” he said.
Goenka assessed that the USD-INR pair, having earlier tested highs near 87.95, has now nearly completed a full retracement of that rally, with the 83.50 level emerging as a key technical support.
“While exporters had previously held out for levels closer to 90, current market dynamics reveal similar expectations from importers anticipating a decline towards 80-81—levels that appear increasingly unlikely in the near term as RBI will sooner or later intervene heavily to sweep up the dollars and maintain export competitiveness,” the IFA Global chief said.
Geopolitical tensions, particularly any escalation between India and Pakistan, could prompt further short-term upticks in the pair.
Published on May 2, 2025
