A weak dollar and sale of greenbacks by exporters helped the rupee appreciate for the third straight trading session, closing 20 paise up on Monday against the previous close. The rupee closed at 86.80 per US dollar against previous close of 87.
The dollar has weakened against key global currencies amid concerns about slowdown in the US and possibility of adverse implications on world trade of reciprocal tariff wars.
“Indian rupee gained for the third session, closing at 86.80 per dollar, adding to the positive investor sentiments. Last week, FIIs sold just about ₹5,700 crore of equites compared to ₹15,500 crore in the first week of March. This slowdown in the selling intensity suggests there could be limited downside in the near term,” said Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd.
He noted that market participants will watch out for the interest rate decisions of the US Fed and Bank of Japan on Wednesday and Bank of England on Thursday.
Khemka observed that the US Central bank is expected to hold interest rates steady, maintaining its stance from the last meet due to risk of inflationary pressure from the US tariff policies.
Meanwhile, India’s merchandise trade deficit compressed to a 42-month low $14.1 billion in February 2025 from $19.5 billion in February 2024.
Aditi Nayar, Chief Economist, Head – Research & Outreach, ICRA, attributed this to a compression in imports of crude oil, gold and silver.
“A portion of the y-o-y decline in merchandise exports can be attributed to the base year effect related to the leap month. The trade deficit was also significantly lower than the average of over $23.0 billion during the first 10 months of FY2025. Given this print, we now expect the current account to witness a surplus of ~$5 billion in Q4 FY2025, equivalent to ~0.5 per cent of GDP, in the ongoing quarter,” Nayar said.
