New Delhi– The Indian rupee saw a sharp rise on Friday, trading below the 85 mark against the U.S. dollar for the first time since December 2024. The gains came as the U.S. dollar index and global oil prices dropped significantly, fueled by recession fears in the United States following the announcement of new reciprocal tariffs by former President Donald Trump.
The rupee opened the trading session at 85.04 and quickly appreciated to 84.99 in early trade—up nearly 40 paise from its previous close of 85.44.
Analysts attribute the rupee’s rally primarily to a weakening dollar, triggered by Trump’s tariff policy, and a steep fall in crude oil prices. The dollar index—which measures the U.S. currency against a basket of six major world currencies—plunged to around 101.70 following the tariff news. On Thursday, when the policy was announced, the index stood at 104.
Experts say Trump’s tariff measures exceeded market expectations, heightening fears of a potential recession in the U.S. economy, which in turn is weighing down the dollar.
Another key factor behind the rupee’s strength is the decline in global crude oil prices. Brent crude is currently trading near $69.64 per barrel. As India imports over 80 percent of its crude oil needs, any drop in oil prices significantly reduces the country’s foreign exchange outflow, which supports the rupee.
Jateen Trivedi, Vice President and Research Analyst for Commodities and Currencies at LKP Securities, noted a strong recovery in the rupee against the dollar. “Due to global cues and foreign institutional investor (FII) flows, the rupee may trade between 85.00 and 85.90 against the dollar,” he said.
A report by Bank of Baroda (BoB) highlighted that the Indian rupee remained relatively stable throughout FY25 when compared to other major global currencies, even as a strong U.S. dollar weighed on most currency pairs. Toward the end of the fiscal year, a reversal in dollar strength and renewed foreign portfolio investment (FPI) inflows into Indian debt markets helped drive a rupee rally. In one month alone, the rupee regained as much as 2.4 percent. (Source: IANS)
