Indian Rupee Surges, Recovers 2025 Losses Amid Foreign Bank Dollar Sales and Inflows

The Indian rupee experienced a significant surge on Monday, rebounding from its losses in 2025. The currency closed at 85.6350 against the U.S. dollar, marking a 0.4% increase for the day. This rally was fueled by persistent dollar sales from foreign banks, coupled with inflows related to inter-company borrowings and repatriation of corporate profits, typical for March, the end of India's financial year. Inflows into Indian bonds, totaling approximately $3 billion so far in March, and increased foreign buying of Indian stocks, also contributed to the rupee's strength. The Reserve Bank of India's apparent lack of active bidding further supported the rupee's rise. The currency has gained 2.1% this month, outperforming its Asian counterparts. The Nifty 50 index also mirrored this positive trend, erasing its 2025 losses with a nearly 1.5% increase on Monday. While further gains are anticipated, analysts suggest a potential cap around 85.15-85.20 as importers may capitalize on bargain dollar purchases. Some analysts caution that the rally might be underestimating India's exposure to upcoming U.S. tariffs.