Topic 5: RUPEE: DELICATE REBALANCE

In March 2025, the Indian Rupee (INR) exhibited notable volatility against the U.S. Dollar (USD), influenced by both domestic economic conditions and global financial trends. The month began with the USD/INR exchange rate at ₹87.4715 on March 1, briefly peaking at ₹87.4416 on March 2. However, the rupee strengthened steadily throughout the latter part of the month, reaching its lowest level—indicating appreciation—at ₹85.4358 on March 31. While the average exchange rate for the month was not specified, the movement suggests a strengthening of the rupee toward the end of March. The rupee’s trajectory was initially pressured by outflows from Foreign Institutional Investors (FIIs), reflecting global risk aversion and portfolio rebalancing. However, as market sentiment improved, renewed FII inflows supported a rebound in the currency. Exporters also contributed to the rupee’s appreciation by selling dollars, particularly during the final weeks of the month. Domestically, a widening trade deficit due to increased imports posed challenges for the rupee, exerting downward pressure during the first half of March. Nonetheless, several supportive factors helped the rupee recover. Favourable macroeconomic indicators, such as easing retail inflation, boosted investor confidence and strengthened the currency on select days. Additionally, falling global crude oil prices reduced India’s import bill, offering relief to the rupee and improving the overall balance of payments. The Reserve Bank of India (RBI) also played a key role in managing currency volatility through strategic market interventions and liquidity management tools. Overall, the rupee’s performance in March 2025 reflected a complex interplay of global economic developments, capital flows, trade dynamics, and proactive central bank measures. Going forward, INR is expected to remain sensitive to global interest rate decisions, commodity prices, and foreign investment trends.



Top | Back
The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
Copyright © 2024 Fintso