USD/INR: Rupee Strengthens for 4th Week in a Row; Know What’s Driving the Rally as of May 2

The Indian Rupee has extended its winning streak into the fourth consecutive week as of May 2, 2025, fuelled by robust foreign investor inflows and improving global sentiment. The local currency breached the critical 84 per dollar mark intra-day, highlighting strong upside momentum.

The USD/INR FX spot rate was trading lower at 84.29, down 0.3 points or 0.35% at 15:45 PM as of May 2, 2025. The intraday range saw the rupee fluctuate between 83.77 and 84.66, while the 52-week range stands between 82.95 and 87.99. The Indian Rupee appreciated by 1.22% last week, continuing its upward trajectory.

From Record Lows to a Sharp Rebound

Earlier this year, in February, the rupee had plunged to a record low of 87.95 amid uncertainty linked to Trump’s tariff proposals. However, it rebounded sharply over March and April, supported by strong portfolio inflows and rising optimism that India could be among the first to clinch a trade pact with the US.

According to a Reuters report, the rupee’s rally has also been fuelled by short covering. Additionally, exporters’ dollar sales and a reduction in bearish positions against the rupee have contributed to the gains.

Foreign Inflows Hit 11-Session Streak

A key driver of the rupee’s rally is the sustained buying activity by foreign institutional investors (FIIs). FIIs have been net buyers for 11 consecutive sessions, marking the longest streak of inflows in two years.

On Wednesday, April 30, FIIs purchased Indian equities worth Rs 50 crore, helping reverse earlier outflows of ₹35,000 crore in April. With this, they’ve turned net buyers for the month.

Domestic institutional investors (DIIs) also played a crucial role, maintaining a positive stance by buying shares worth ₹1,792 crore, according to provisional data.
During the April 30 session, FIIs bought equities worth ₹25,190 crore and sold ₹25,139 crore, while DIIs purchased ₹14,429 crore and sold ₹12,637 crore, showing a net positive outlook on Indian markets.

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Conclusion

The Indian Rupee’s impressive rally for the fourth consecutive week highlights the ongoing strength in the currency market, driven by consistent foreign institutional investor inflows, optimism around trade deals, and supportive actions from exporters.

While the rupee had faced significant challenges earlier this year, it has made a remarkable recovery, bolstered by the positive sentiment in the Indian economy and equities market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.