In a notable shift, the Indian rupee surged past the 84 per U.S. dollar mark during early trading on Friday, marking its highest point since October 2024. This significant increase was fueled by substantial dollar sales from foreign banks and the strengthening of regional currencies, creating a favorable environment for the rupee’s rise.

Rupee’s Impressive Climb

The rupee reached an impressive peak of 83.83, reflecting a 0.7% increase from the previous closing price of 84.4875. Over the week, the currency has appreciated nearly 2%, showcasing a robust performance that has caught the attention of traders and analysts alike.

• Key Drivers of Strength:
  • Increased dollar inflows into Indian equities.
  • Optimism surrounding a potential U.S. trade deal.
  • A reduction in short positions against the rupee.

Traders highlight that foreign institutional investors have consistently purchased Indian stocks for 11 consecutive sessions, marking the longest streak of inflows in two years, further bolstering the rupee’s position.

Analysts Adjust Projections

The recent gains in the rupee have prompted financial experts to revise their forecasts. MUFG has notably updated its prediction, now expecting the rupee to end the year at 84, a significant upward revision from its previous estimate of 87.

"We anticipate the rupee will outperform other Asian currencies, especially with our global team’s outlook pointing towards a weaker U.S. dollar and favorable tariff results for India in the upcoming Trump administration," MUFG noted in its recent analysis.

Market Dynamics

On the trading floor, foreign banks were observed actively offering dollars, likely catering to their custodial clients. This move, combined with limited buying interest, allowed the rupee to surpass the 84 threshold, according to a trader from a state-run bank.

This dynamic reflects the ongoing shifts in the currency market, highlighting the rupee’s resilience amidst global economic fluctuations. As the situation evolves, both investors and analysts will be keenly monitoring the rupee’s trajectory in the coming weeks.

Conclusion

With foreign capital inflows and a buoyant market sentiment, the Indian rupee’s climb past 84 signals a positive outlook for the currency. Stakeholders across the financial landscape are watching closely, as the rupee’s performance could have broader implications for the Indian economy and trade dynamics in the near future.