The rupee jumped 64 paise or 0.74% to close at 86.0537 against the US dollar on Friday, recording its biggest gain in two months, tracking gains in major Asian currencies as the dollar index fell to a nearly two-year low. The local currency was also supported by a strong gain in the equity market. The rupee had gained 65 paise on February 11. However, on the weekly basis, the rupee has weakened by 0.9%.
The rupee surged 64 paise, or 0.74%, to close at 86.0537 against the US dollar on Friday — its biggest single-day gain in two months — tracking strength in major Asian currencies as the dollar index fell to a near two-year low. The rally was also supported by strong gains in the equity market. The rupee had previously gained 65 paise on February 11. However, on a weekly basis, it still ended 0.9% lower.
“Rupee appreciated after three days of decline following stronger regional currencies and risk-on sentiments. The US government’s decision of pausing reciprocal tariff for 90 days and tit-for-tat approach between US-China weighed on the greenback,” Dilip Parmar, senior research analyst, HDFC Securities.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 1.52% to a six-month low of 99.335. The decline was driven by softer-than-expected inflation data and a surprising diplomatic tone from Donald Trump on US-China trade relations.
Among the major Asian currencies, South Korean Won gained the most, rising 1.8%, followed by the Thai Baht (1.7%) and the Japanese Yen (1.3%). Malaysian Ringgit, Singapore dollar, Philippine Peso and Chinese yuan rose by 0.3- 1%.
“The key driver behind the dollar’s sharp depreciation was the unexpected easing in US inflation, which cooled to 2.4% from the previous 2.8%, while core inflation slipped to 2.8% – its lowest level since April 2021. This softer inflation print increased the likelihood of further rate cuts by the US Fed, weakening the greenback,” said Amit Pabari, managing director, CR Forex Advisors.
With the rupee now firming and sentiment improving, a sustained breach below 86 could open the door for further gains toward the 85.50–85.60 levels, he added.
A 90-day pause on US reciprocal tariffs by President Donald Trump, excluding China, sparked a relief rally in markets on Wednesday. However, renewed concerns about the broader economic impact of tariffs resurfaced, putting pressure on the dollar.
At the interbank foreign exchange, the local currency opened at 86.2475 against the US dollar and rose to 85.9450 during intraday close.
Crude oil futures were trading near four-year low, which continued to support the local currency. Brent crude, the global oil benchmark, rose marginally by 0.43 % to $ 63.60 per barrel in futures trade.