The Indian rupee posted its biggest weekly gain in over two years on March 21, 2025, driven by strong foreign inflows and a revival in domestic equities. Analysts expect further fluctuations based on global economic factors.
The Indian rupee surged to its strongest level in 10 weeks, posting its best weekly gain in more than two years, supported by robust dollar inflows and renewed investor confidence in the domestic equity market.
On March 21, 2025, the rupee closed at 85.9725 per U.S. dollar, marking a sharp appreciation from its previous close of 86.3675. The Indian currency gained 1.2% over the week, its biggest weekly surge since early 2023. During the trading session, it touched a high of 85.9375.
Market Drivers Behind the Rupee’s Strength
According to Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm, a revival in India’s equity market has significantly improved investor sentiment toward the rupee. She added that if the rupee does not breach the 85.90 mark, it could face depreciation pressure, with support levels expected between 86.80 and 87.00.
Traders highlighted that foreign banks were actively participating in dollar inflows, contributing to the rupee’s strength. Additionally, the rebalancing of the FTSE All-World Index, which took effect on March 21, brought in estimated inflows of $1.5 billion, further supporting the currency’s rise.
Indian Equities and Foreign Investment
India’s Nifty 50 index rose 0.7% on Friday, signaling positive investor sentiment. Data from stock exchanges showed that foreign portfolio investors (FPIs)—who had been net sellers in the Indian market since late 2024—turned buyers in two of the last four trading sessions.
Global Market Impact
While the rupee strengthened, most Asian currencies weakened due to concerns over U.S. trade policies and economic growth. The dollar index saw slight gains, and analysts are closely watching the U.S. manufacturing and services data, set to be released on Monday, which may impact global currency movements.
Analysts predict the rupee’s movement will depend on U.S. economic data, Federal Reserve policies, and global trade trends. If positive foreign investment flows continue, the rupee could maintain its upward momentum in the coming weeks.
