The Indian rupee recorded its strongest weekly performance since January 2023, buoyed by a global decline in demand for the US dollar. A temporary ceasefire between Iran and Israel eased geopolitical tensions, leading to a drop in crude oil prices—reducing import-related dollar demand and weakening the greenback’s safe-haven appeal.
In addition, renewed concerns about the long-term independence of the US Federal Reserve weighed on the dollar, adding further momentum to emerging market currencies.
Despite this weekly surge, the rupee remains a laggard when compared to its Asian counterparts in 2025. Currencies such as the South Korean won and the offshore Chinese yuan have appreciated between 2% and 9% this year, while the rupee has remained relatively flat.
Market analysts suggest the rupee is likely to continue underperforming due to structural challenges. However, they also note that a broadly weaker dollar and steady portfolio inflows from foreign investors could offer near-term support.
