Rupee Firms Up to Strongest Level Since October 2023, Moves Below 84/$

The uptick in the local currency continued as the Indian rupee strengthened against the US dollar on May 2, moving below the 84-mark for the first time since October last year. The local currency hit a seven-month high after it opened 40 paise higher in today’s session.

The Indian Rupee opened at 84.0987 against the US dollar, before strengthening further to 83.907, stronger than the previous close of 84.4950 against the greenback. With this, The currency is now up nearly 2% on the week.

Experts in the currency market believe that foreign inflows in to domestic equity and debt, buoyed by the progress in trade talks between India and the US have helped bolster sentiment for the Indian rupee.

After relentlessly selling off domestic equities since October last year, foreign institutional investors finally made a comeback in April as part of their reallocations in the wake of Trump’s trade uncertainties. In that backdrop, FIIs have bought Indian equities for 11 consecutive sessions, marking their longest buying streak in two years.

“Rupee traded strongly positive, supported by robust FII and DII fund inflows and optimism around US-India trade deal developments. The rupee strengthened on expectations that India could emerge as a key alternative to China in US trade flows, boosting confidence in Indian markets,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Also Read: What Goes Into Determining the 'Fair' Value of the Rupee?

Looking ahead, Trivedi expects the Indian rupee to shift further. Just earlier this week, the Indian rupee had also clocked in its biggest single day upmove, surging 77 paise against the US dollar to close at a fresh five-month high. “This marks the rupee's most significant single-day gain since November 11, 2022. The impressive upswing was primarily fuelled by the softening global crude oil prices and sustained FII inflows,” said Nandish Shah - Deputy Vice President, HDFC Securities.    Als

On April 29, India’s commerce ministry announced that New Delhi and Washington are eyeing early mutual wins as they move closer to sealing a multi-sector bilateral trade agreement (BTA) by autumn 2025, with in-person sectoral discussions set to begin at the end of May. That same day, US President Donald Trump said tariff talks with India were “going great,” hinting at a potential deal on the horizon.

Meanwhile, a cooldown in oil prices have also boosted sentiment for the local currency. Crude oil prices are hovering around the $60-per barrel mark, easing India’s import bill and taking pressure off the local currency.