By News Desk 
The Indian rupee on Friday strengthened against the US dollar, below the 84 mark and touched a nearly seven-month high. The rupee jumped 71 paise to close at 83.78 against the dollar — its biggest single-day gain in two-and-a-half years.
What are the reasons behind the rupee’s rise?
Flood of foreign investment
Experts believe that strong inflows of foreign investment in the Indian stock market and bond market have strengthened the rupee. March and April saw gains of 2% and 1.16% respectively, indicating that foreign investor confidence is steadily rising.
Expectations about Trump’s deal
Former US President Donald Trump’s positive statement on the India-US tariff agreement enthused the market. This supported the rupee against the dollar.
Dollar weakness and RBI silence
The dollar index has slipped to 100.02, one of the weakest levels since November 2022. Despite this, surprisingly, the Reserve Bank of India (RBI) did not buy any dollars in the market, while it had a short position of $84 billion till March 2025.
Is there a danger looming over the rupee going forward?
Experts are not completely sure whether the current strength of the rupee will be permanent or not. There is a possibility of volatility due to increasing tension with Pakistan over the Kashmir issue and a possible return in the dollar index. The possibility of the dollar index jumping to 102 has also been expressed, especially if US trade talks make progress.
Rise in crude oil prices: New risk factor?
Crude oil prices rose after Donald Trump warned of secondary sanctions on Iran:
- Brent crude: $62.62 per barrel (0.79% ↑)
- WTI crude: $59.75 per barrel (0.86% ↑)
This rise in crude oil could increase the import bill, which could put pressure on the rupee.
How will a strong rupee affect your pocket?
| Item/Sector | Why it may become cheaper |
|---|---|
| Petrol-Diesel | Cheaper imports due to purchases made in US dollars |
| Mobiles, Laptops, Electronics | Largely import-dependent products |
| Pharmaceutical APIs | Raw materials for pharma industry become more affordable |
| Car Parts | Reduced import costs for auto companies |
| Gold and Silver | Priced in dollars, stronger rupee puts downward pressure |
| Foreign E-commerce Goods | Products from platforms like Amazon/Aliexpress get cheaper |
However, the impact may not be visible immediately — companies have to clear old stocks. If the government increases taxes or crude oil becomes more expensive, the gains may be limited.
Conclusion: Strong rupee relief or illusion?
The current strength of the rupee is driven by foreign inflows and expectations of a possible trade deal with the US. However, global volatility, regional tensions and crude oil prices could determine the direction of the rupee in the next few weeks. Investors have to be cautious as the dollar may reverse its trend.