The Indian rupee surged sharply on Friday, dropping below the 84 mark against the US dollar and reaching its highest level in seven months. This marks the biggest single-day gain for the rupee in nearly two and a half years. On Thursday, the rupee had closed at 84.49. The rally was driven by consistent foreign investments and optimism around US trade talks.
On Friday, the rupee strengthened by 71 paise to settle at 83.78 per dollar.
Market Experts Weigh In
According to market analysts, the surge in the rupee was supported by strong foreign inflows into the equity and debt markets. Positive remarks from former US President Donald Trump regarding a potential India-US tariff deal also boosted sentiment.
Experts further noted that despite the dollar’s weakness globally, the rupee opened strong, fueled by sustained foreign buying and dollar selling in the local market. What surprised many was the Reserve Bank of India (RBI) staying out of the market, choosing not to buy dollars, even though it held a short dollar position of $84 billion maturing by March 2025.
Global Factors Also at Play
The ongoing trade tensions between China and the US are also affecting global markets. The US Dollar Index has hit its lowest level in the past two weeks, while the Chinese yuan has also weakened, trading 0.31% lower.
Stronger Rupee – What Could Get Cheaper?
A rising rupee can help bring down prices in several sectors:
| Goods/Sectors | Why Prices Could Fall |
|---|---|
| Petrol & Diesel | Crude oil is priced in dollars; a stronger rupee makes imports cheaper |
| Mobile Phones & Electronics | Items like iPhones, laptops, and TVs are largely imported |
| Pharma Raw Materials (APIs) | Active pharmaceutical ingredients imported from abroad may become cheaper |
| Auto Parts | Car makers using imported parts will see reduced costs |
| Gold & Silver | These are also priced in dollars; a stronger rupee puts downward pressure on prices |
| Imported E-commerce Goods | Products bought from platforms like Amazon or AliExpress could become cheaper |
However, these effects aren’t immediate. Companies typically have to clear out older inventory first. If global crude prices rise or the government hikes taxes, the benefit may be offset. Similarly, if the dollar regains strength, the trend could reverse.
Leave a Reply