Indian Rupee Expected to Open Higher Amid Foreign Inflows and Market Optimism
The Indian rupee is set to open higher on Friday, supported by a resurgence in foreign inflows into local equities and improving market sentiment. The one-month non-deliverable forward indicates the rupee will open between 85.68 and 85.72 against the U.S. dollar, strengthening from 85.78 in the previous session. The rupee has maintained its rally above the 86-mark, largely driven by renewed investor confidence and substantial foreign investments in Indian equities.
Foreign investors injected over $1.2 billion into Indian shares on Thursday, bringing total equity inflows over the past six sessions to $6 billion. This marks a strong reversal from the previous trend of outflows and has significantly impacted the currency market. A bank currency trader noted that the rupee holding above 86 was unexpected, emphasizing the role of equity inflows and the diminishing trend of USD/INR dip-buying strategies. Meanwhile, Asian currencies remained rangebound as markets awaited further clarity on U.S. trade policies.
U.S. President Donald Trump’s announcement of a 25% tariff on imported cars, set to take effect on April 3, had a limited impact on the forex market. Investors are now shifting focus toward the Federal Reserve’s preferred inflation gauge, expected later in the day, while the dollar index stands at 104.27, Brent crude hovers around $74 per barrel, and U.S. Treasury yields hold at 4.34%.
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