Rupee near two-month high: Key drivers behind the rally

The Indian rupee appreciated by 12 paise to 86.25 against the US dollar in early trade on Thursday (March 20), buoyed by strong domestic equities and a weaker greenback in global markets.

This marks a near two-month high for the currency, which has been gaining ground amid foreign bank-led dollar sales and seasonal inflows.

Factors supporting the rupee’s rise

Forex traders noted that strong foreign inflows into debt markets have supported the rupee, allowing it to resist external pressures.

However, headwinds persist due to continuous foreign institutional investor (FII) outflows and uncertainty surrounding former US President Donald Trump’s tariff policies, which could impact sentiment.

At the interbank forex market, the rupee opened at 86.39 per dollar before strengthening to 86.25, marking a 12-paise gain from its previous close.

On Wednesday (March 19), it had risen by 19 paise to settle at 86.37 per dollar.

“The USD-INR pair is expected to trade in the 86.00–86.80 range in the near term. Given FII outflows and liquidity deficit conditions, a rebound toward 86.50–86.60 is likely,” said Amit Pabari, Managing Director, CR Forex Advisors.

Global and domestic market trends

Dollar index: The US dollar index edged 0.04% lower to 103.38, reflecting global weakness.

Oil prices: Brent crude futures were up 0.58% at $71.19 per barrel.

Despite the rupee’s resilience, FIIs remained net sellers, offloading equities worth ₹1,096.50 crore on Wednesday (March 19) , according to exchange data.

–With PTI inputs

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