Synopsis
On April 4, the Indian rupee strengthened against the dollar, trading below 85. This rise was driven by a decline in the dollar index and oil prices amid recession fears linked to reciprocal tariffs announced by President Trump. Experts foresee the rupee maintaining stability in the range of 85 to 85.90.Key Takeaways
- The rupee traded below 85 against the dollar for the first time since December 2024.
- Reciprocal tariffs announced by President Trump weakened the dollar.
- Brent crude oil prices dropped to 69.64 dollars per barrel.
- India's reliance on oil imports impacts the rupee's strength.
- Experts predict the rupee may stabilize between 85 and 85.90.
New Delhi, April 4 (NationPress) The Indian rupee made significant advancements on Friday, trading below 85 against the dollar, as the dollar index and oil prices plummeted amidst fears of a recession in the US economy following the announcement of reciprocal tariffs.
This marks the first instance since December 2024 that the rupee has traded below 85 against the dollar. The trading session commenced with the rupee opening at 85.04 and quickly rising to 84.99, which is nearly 40 paise higher than the previous closing of 85.44.
The strengthening of the rupee against the dollar can be largely attributed to the decline in the dollar index caused by the reciprocal tariffs imposed by US President Donald Trump, along with a decrease in crude oil prices.
Since the announcement of these tariffs, the dollar index, which measures the strength of the US dollar against the currencies of six major economies, has seen a sharp decrease to about 101.70.
On the day the tariffs were unveiled, the dollar index was at 104.
Experts indicate that the tariffs imposed by President Trump exceeded expectations, creating concerns that the US economy could enter a recession, thereby weakening the dollar.
Another contributing factor to the rupee's strength is the significant drop in crude oil prices, with Brent crude hovering around 69.64 dollars per barrel.
As India relies on imports for over 80 percent of its crude oil needs, a decline in crude oil prices results in substantial savings in foreign currency, allowing the rupee to appreciate against the dollar.
Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, noted a remarkable recovery in the rupee's value against the dollar. He believes that due to global factors and foreign institutional investments, the rupee is expected to remain in the range of 85 to 85.90 against the dollar. When compared to other global currencies, the Indian rupee's performance in FY25 was relatively stable, although the strength of the dollar affected all major currency pairs.
As the year progresses, a reversal in dollar strength alongside foreign portfolio investment inflows into debt has supported a rally in the rupee, with the domestic currency recovering as much as 2.4 percent in just one month, as reported by Bank of Baroda (BoB).
