USD/INR: Rupee Gains for the Week Ending March 21 on Strong Foreign Bank Dollar Inflows

The Indian rupee extended its weekly gains on Friday, buoyed by steady dollar inflows that helped counter the decline in other Asian currencies. The rupee ended the day at ₹85.98 per U.S. dollar, marking a 0.46% appreciation and extending its weekly advance to nearly 1%.

Rupee Ends as the Best-Performing Asian Currency

With this week’s 1% appreciation, the rupee has now gained over 1.3% in March, making it the top-performing major Asian currency this month. Strong dollar sales by foreign banks, primarily driven by client flows, played a crucial role in pushing the rupee to the forefront of regional currencies.

Reversal From February’s All-Time Low

The recent strengthening marks a significant turnaround for the rupee, which had previously been under pressure due to equity outflows and hedging activities by importers.

In February, the rupee had plunged to an all-time low of ₹87.95 per U.S. dollar, but inflows from foreign banks have since helped the currency recover.

Best Weekly Performance in Two Years

The rupee is now on track for its best weekly performance in two years, largely due to foreign capital inflows and traders unwinding long-dollar positions.

Market analysts suggest that the rupee’s upward momentum is backed by a mix of strong foreign investments and strategic interventions by major financial institutions.

Global Market Trends

While the rupee gained, most Asian currencies weakened on Friday, as the U.S. dollar index edged higher.

The primary focus for currency markets remains on U.S. trade policy and economic growth trends, which continue to influence emerging market currencies.

With robust foreign bank inflows and improving investor sentiment, the rupee’s performance will be closely watched in the coming weeks.

Crude Oil 

At 4:05 PM (IST), Brent crude rose to $71.76 per barrel, recovering after a 0.33% decline in the previous session, while West Texas Intermediate (WTI) traded above $67.87.

The rise in crude prices followed the White House’s new sanctions on Iran, targeting the country’s oil minister, companies, and vessels involved in crude transport.

Additionally, the U.S. imposed restrictions on payment options for Russian energy, further impacting global oil markets.

Conclusion

The Indian rupee’s strong performance this week underscores a significant rebound from its February lows, driven by foreign bank inflows and reduced dollar demand.

With its best weekly gain in two years, the rupee remains the top-performing Asian currency this month.

Meanwhile, rising crude oil prices, influenced by U.S. sanctions on Iran and Russia, add another layer of complexity to global financial markets in the coming weeks.

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