The Indian rupee strengthened for the third consecutive day, aligning with regional currencies as risk assets surged, while the “safe-haven U.S. dollar” which was seen “smiling” since early January 2024, weakened due to falling U.S. Treasury yields, analysts said.
The rupee and Asian currencies also appreciated as the dollar index fell.
“Expectations of earlier rate cuts, driven by decreasing inflation and concerns over economic growth [in the U.S.], further bolstered the rupee’s momentum,” said Dilip Parmar – Senior Research Analyst, HDFC Securities.
“The rupee closed higher at 87.06 against the U.S. dollar, marking its best single-day gain since February 11, 2025,” as per an analyst.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said “Rupee traded strongly positive, gaining 27 paise to 86.94, as domestic markets saw strong recovery supported by strong DII inflows countering the persistent FII sell-off with expected weak FII number on selling side.”
“Global trade tariff changes continue to create uncertainty, but DII investments in domestic-oriented sectors after heavy selling provided some stability. Additionally, soft crude oil prices offered further support to the rupee,” he said.
“This week, key U.S. data releases such as ADP Non-Farm Employment, Non-Farm Payrolls, and Unemployment data will be closely watched by market participants. Additionally, tariff updates will keep markets volatile,” he added.
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The dollar Index called DXY which measures the dollar against most traded currencies has fallen to it’s lowest since early December 2024.
Analysts believe, foreign investors have found alternatives at their domestic economises to dollar which had traditionally thrived during times of uncertainties and accuse stress as a “safe haven” investment.
Published – March 05, 2025 09:25 pm IST
