Key Points

The report expects the rupee to move in the range of 84-85 per US dollar in the coming days.

It said, "We expect INR to trade with an appreciating bias in the near-term in the range of 84-85/USD. However, escalation in US-China trade relations poses a significant risk to our view."

In April 2025, the rupee appreciated by 1.1 per cent, following a stronger gain of 2.4 per cent in March 2025. This rise was mainly due to a sharp decline in the US dollar, which weakened on the back of a sluggish economic outlook in the United States. Lower global oil prices also played a key role in boosting the rupee's value.

The report also highlighted that improving investor sentiment is another key factor supporting the Indian currency. After three consecutive months of outflows, equity markets in India saw positive foreign investment inflows in April 2025.

This marks a shift in global investor sentiment toward emerging markets, especially India.

One of the contributing factors to this change is a softer stance by the US on tariffs. US officials have indicated that significant progress has been made in trade talks with key trading partners. This development has helped calm global market nerves and improved risk appetite among investors.

The report also emphasized that emerging market assets, including India's, could witness a gradual recovery in foreign inflows if the current trend continues. India's strong macroeconomic fundamentals, stable domestic environment, and robust growth outlook make it an attractive destination for global investors.

However, the report also cautions that an escalation in trade tensions between the US and China remains a key risk to this outlook. Any deterioration in global trade relations could impact investor sentiment and weigh on the rupee.

Overall, with stable domestic conditions, improved foreign inflows, and easing global uncertainties, the Indian rupee is expected to remain supported in the near term.

- ANI