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The Indian rupee on Friday (May 2) breached the 84-per-dollar mark for the first time since October 2024. Heavy dollar sales by foreign banks and robust regional currencies powered the rally.
The rupee hit a peak of 83.77 in early trade, rising 77 paise from its previous close of 84.54. It has now gained nearly 2% this week, marking its best weekly run in years.
Foreign funds have been pouring into Indian equities, lifting market sentiment. Foreign institutional investors have bought local stocks for 11 consecutive sessions, the longest buying streak in two years.
Strong domestic data added momentum.
April GST collections surged 12.6% year-on-year to an all-time high of ₹2.37 lakh crore.
The sharp rally has led analysts to revise forecasts.
MUFG now expects the rupee to end 2025 at 84, improving from its earlier call of 87.
“We now forecast rupee to outperform Asian FX, helped by global dollar weakness and better-than-expected tariff outcomes for India in Trump 2.0,” MUFG said in a note.
Traders reported foreign banks offering dollars, likely on behalf of custodial clients, while demand for dollars remained weak. This helped the rupee climb past 84.
Domestic equities also rallied. The BSE Sensex jumped 722 points to 80,965, while the Nifty rose 204 points to 24,538.
FIIs bought shares worth ₹50.57 crore on Wednesday (April 30), adding fuel to the rupee rally.
Globally, the dollar index fell 0.27% to 99.97, supporting emerging market currencies. Brent crude rose 0.55% to $62.45 per barrel, but analysts say it has not yet dented rupee gains.
However, risks remain. Analysts caution that rising tensions between India and Pakistan could quickly reverse gains.
“The rupee’s 2% March rise was its best since November 2018. But geopolitical risks, especially around Kashmir, could trigger fresh volatility,” said Amit Pabari, MD, CR Forex Advisors.
The forex market was closed Thursday for Maharashtra Day.
On Wednesday (April 30), the rupee had already surged 42 paise to 84.54.
-With agencies inputs
First Published:
May 2, 2025 10:46 AM
IST
