Despite current headwinds from rising crude oil prices and increased demand for the U.S. dollar, the Indian rupee may be poised for a significant recovery in the near term. Market analysts believe that the domestic currency could soon gain strength, backed by positive momentum from upcoming economic data, which is expected to outperform expectations.
Experts suggest that the rupee, which has recently been under pressure, could break below the 85 mark against the U.S. dollar and strengthen to around 84. A potential appreciation of 60 to 80 paise is being projected in the short term.
Rupee Ends Flat Amid Volatile Trading
On Wednesday, the rupee traded in a narrow range and ended the session largely unchanged at 85.40 against the dollar, following a day of volatile movements. Initially, the currency opened at 85.59 and fluctuated between an intraday high of 85.33 and a low of 85.72.
The sideways movement came as traders adopted a cautious stance ahead of key domestic macroeconomic data. The Index of Industrial Production (IIP) figures for April are expected later in the day, while GDP growth data for the first quarter of FY26 will be released on Friday.
The strengthening of the dollar toward the end of the month, along with negative sentiment in domestic equity markets, also weighed on the rupee.
Outlook Remains Positive for the Rupee
According to Jatin Trivedi, Vice President of Research (Commodities & Currencies) at LKP Securities, the rupee’s relative stability has been supported by a steady U.S. dollar index. He noted that the currency’s next move will likely be influenced by upcoming global economic indicators, including the U.S. Fed’s meeting minutes, first-quarter GDP figures, and the Core PCE Price Index.
He further added that foreign fund flows in secondary markets will play a crucial role, with the rupee expected to trade in the 84.80–85.75 range in the near term.
Oil Prices Rise, Dollar Gains on Strong U.S. Data
Meanwhile, the U.S. dollar index, which measures the greenback’s performance against a basket of six major currencies, rose slightly by 0.05% to 99.47. Analysts attributed the dollar’s resilience to stronger-than-expected durable goods orders and improved consumer confidence in the U.S.
On the commodities front, Brent crude prices climbed 0.67% to reach $64.52 per barrel in international markets, adding to inflationary concerns and pressuring emerging market currencies like the rupee.
Indian Equities End Lower
Indian stock markets mirrored the cautious mood, with the BSE Sensex falling by 239.31 points (0.29%) to settle at 81,312.32. The NSE Nifty also dropped by 73.75 points (0.30%) to close at 24,752.45.
Despite this, foreign institutional investors (FIIs) remained net buyers, purchasing shares worth ₹348.45 crore on Tuesday, according to exchange data—offering some support to the local currency outlook.
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