The Rupee appreciated further in trading so far on Thursday in the backdrop of the trade deficit for February 2025 narrowing to a 41 month low of $14 billion even as the US Fed held its rates steady.

The Indian currency opened 5 paise stronger at 86.39 per US Dollar (USD) against previous close of 86.44. In intraday trades so far, it tested a high of 86.20 and a low of 86.4125. It is currently trading at 86.3175.

The Rupee appreciated on Wednesday to close about 12 paise higher at 86.44/USD against previous close of 86.56.

Amit Pabari, MD, CR Forex Advisors, noted that the Rupee has staged a counterattack against external pressures, gaining support from strong foreign inflows into debt markets. With India’s real yield at 3.06 per cent, global investors have poured in nearly $496 million since March 17, pushing the rupee higher.

“Adding further strength, India’s trade deficit narrowed to -$14.05 billion—the lowest since September 2021—resulting in a rare overall trade surplus of $4.5 billion. Meanwhile, industrial production surged by 5 per cent, and GDP growth rebounded to 6.2 per cent, reinforcing India’s economic resilience,” he said.

Pointing out that risks remain, Pabari cautioned that a ₹2 lakh crore liquidity shortfall, a Foreign Institutional Investor (FII) sell-off of ₹1,096.50 crore on Wednesday and uncertainty surrounding Trump’s tariff stance could pose challenges to the rupee’s upward momentum.

Given the current market dynamics, he expects the USDINR pair is expected to trade between 86.00 and 86.80 in the near term.

Meanwhile, yield of the benchmark 10-year Government Security (6.79 per cent GS 2034) thawed about 2 basis points in trading so far in the wake of RBI conducting OMO purchase of G-Secs and VRR auctions to infuse liquidity in the banking system.

This G-Sec is currently trading at a yield of 6.64 per cent against yesterday’s close of 6.66 per cent.

Published on March 20, 2025