Key Points
Rupee hits lowest level against dollar since December 2024
Trump's tariffs trigger dollar index decline
Crude oil price drop supports rupee strength
Foreign investment flows boost currency performance
It is for the first time since December 2024 when rupee traded below 85 against dollar. At the beginning of the trading session, the rupee opened at 85.04 and in the early trade, it stood at 84.99, almost 40 paise up from the previous close of 85.44.
The reason for the rise in rupee against dollar is attributed to the weakening of dollar index due to the reciprocal tariff imposed by US President Donald Trump and the fall in crude oil prices.
Since Trump announced the tariffs, the dollar index, which shows the strength of the US currency against the currencies of the world's six major currencies, has sharply declined -- around 101.70.
On Thursday, when the tariffs were announced, the dollar index stood at 104.
According to experts, the tariffs imposed by President Trump are more than expected, due to which there is a risk of the US economy going into recession and due to this, the dollar is becoming weak.
One reason for the strength of the rupee against the dollar is the sharp decline in crude oil. Brent crude remains close to 69.64 dollar per barrel.
India imports more than 80 per cent of its crude oil requirement, so whenever the price of crude oil falls, the country save a large amount of foreign money. It helps rupees to gain against dollar.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said there has been a sharp recovery in the rupee against the dollar. Due to global cues and FIIs flow, the rupee can remain between 85 to 85.90 against the dollar. The performance of Indian rupee in FY25, when compared with other global currencies, was relatively stable, with a stronger dollar weighing on all major currency pairs.
Towards the end of the year, a reversal in dollar strength and FPI inflows into debt supported a rally in rupee, with the domestic currency recouping as much as 2.4 per cent in a single-month alone, according to a report by Bank of Baroda (BoB).
Comments:
Priya K.
This is great news for Indian travelers and importers! Finally some relief after months of rupee depreciation. Let's hope this trend continues 🤞
Rahul M.
Interesting analysis but I wish the article had more data on how this affects common people beyond just travelers. What about inflation? Electronics prices? Would love to see a follow-up piece on this.
Sunita P.
Trump's policies always create waves in global markets! The rupee gaining strength is good but I worry how long this will last. Our economy needs more stable fundamentals rather than relying on external factors.
Amit S.
As someone who sends money to family abroad, this is a welcome change! The 40 paise difference might not seem like much but it adds up over time. Thank you for breaking down the reasons so clearly.
Neha T.
The article mentions oil prices but doesn't explain why they're falling. Would be helpful to include that context too. Otherwise good coverage of an important economic development! 👍
Vikram J.
Finally some good news for my US-bound investments! Though I wonder if this is just temporary relief before another market correction. The expert quote about the 85-85.90 range seems cautiously optimistic.
