The Indian rupee has shown a notable strengthening trend in recent weeks, buoyed by increased foreign investments and a weakening U.S. dollar. On April 21, 2025, the rupee closed at 85.1275 against the dollar, marking its fourth consecutive day of gains and reaching a two-week high of 85.0450. This appreciation is attributed to several factors, including a decline in the dollar index to a three-year low of 97.9, concerns over U.S. Federal Reserve autonomy, and positive domestic economic indicators.
Foreign investors have shown renewed confidence in the Indian market, with over $1.5 billion invested in Indian equities last week. This influx of capital has supported the rupee's rise and contributed to a positive trend in domestic equity markets, with both the BSE Sensex and Nifty 50 gaining over 1%.
The Reserve Bank of India (RBI) has also played a role in stabilizing the currency, with foreign exchange reserves reaching a five-month high of $677.8 billion. However, the central bank's interventions have been measured, allowing the rupee to appreciate while maintaining market stability.
Looking ahead, the rupee's performance will continue to be influenced by global economic developments, including U.S. monetary policy decisions and trade relations. Domestically, the RBI's policy stance and upcoming economic indicators will be closely watched by investors and market participants.
Overall, the recent strengthening of the Indian rupee reflects a combination of favorable global conditions and positive domestic economic trends, signaling a period of increased stability and investor confidence in the Indian economy.