The Indian rupee extended its recovery for the second consecutive session on Friday, strengthening by 17 paise to trade at 91.41 against the US dollar in early interbank dealings. The domestic currency benefited from improved global sentiment after the United States signaled a more measured stance on trade-related issues, easing concerns of escalating geopolitical tensions.
In early trade, the rupee opened at 91.45 against the US dollar before gaining further ground to touch 91.41. This followed a modest rebound in the previous session, when the currency rose 7 paise to close at 91.58, recovering from record low levels witnessed earlier in the week.
Currency traders attributed the rupee’s recent gains to reduced pressure from global risk factors. Market sentiment improved after US President Donald Trump appeared to soften his position on tariff threats linked to Europe and geopolitical discussions involving Greenland. The remarks helped calm fears of a fresh trade confrontation, supporting emerging market currencies, including the rupee.
Despite the short-term recovery, analysts caution that underlying challenges remain for the Indian currency. Over the past several weeks, the rupee has faced sustained pressure due to persistent foreign institutional investor outflows from Indian equity markets. Global investors have been trimming exposure to emerging markets amid uncertainty surrounding global trade, interest rate trajectories, and geopolitical risks.
The strength of the US dollar has also played a key role in recent rupee weakness. A combination of higher US bond yields and expectations of a prolonged tight monetary stance by the US Federal Reserve has supported the dollar index, limiting the scope for sharp appreciation in emerging market currencies.
Additionally, concerns over India’s trade deficit and rising crude oil prices have weighed on sentiment. India is a major importer of crude oil, and elevated energy prices can widen the current account deficit, increasing demand for dollars and putting pressure on the rupee.
Market participants are closely watching upcoming global economic data and policy signals from major central banks. Any indication of easing inflation in the United States or a shift toward rate cuts could provide further support to emerging market currencies, including the rupee. On the domestic front, factors such as inflation trends, economic growth data, and government policy measures will influence currency movement.
Forex experts believe that while intermittent recoveries are possible, sustained appreciation will depend on a reversal of foreign fund outflows and improved global risk appetite. In the near term, the rupee is expected to trade in a narrow range, with volatility driven by global cues rather than domestic factors alone.
As markets continue to assess geopolitical developments and economic indicators, the rupee’s performance is likely to remain sensitive to shifts in global sentiment, making cautious optimism the prevailing outlook among traders.
