USD vs. INR: After rising by more than 1.60% from a record low of 91.07 versus the US dollar, the Indian Rupee finished at 89.59.
INR vs. USD: After reaching a record high of 91.07 versus the US dollar (USD), the Indian rupee recovered sharply. The Indian National Rupee (INR) recovered more than 1.60% from the record high on Friday, closing at 89.59 after rising for the third consecutive session. The Reserve Bank of India's (RBI) aggressive selling of the USD caused the Indian Rupee to rise on Wednesday and Thursday, according to stock market specialists. The Bank of Japan's move to raise interest rates is what caused the INR to rise on Friday. They said that the Bank of Japan's interest rate decision is expected to put pressure on the US dollar, leading to a pause in the FIIs' selling in the Indian stock market.
Will the Bank of Japan prove to be the Indian Rupee's Santa Claus?
Avinash Gorakshkar, a fundamental equities specialist registered with SEBI, commented on how the Bank of Japan's interest rate decision might affect the Indian Rupee: "The Bank of Japan has raised interest rates, which is historic. The US dollar would be under pressure, which could cause FIIs, who have been net sellers in the Indian stock market since July 2025, to stop buying. The RBI won't need to sell more US dollars if this occurs.
"A pause in FIIs' selling would stop outflow in the US Dollar from India, which would strengthen India's Dollar reserves," stated Anuj Gupta, Director at Ya Wealth, about how FIIs' suspension of Indian stock sales would strengthen the Indian Rupee. Interestingly, the average dollar reserve for Indian imports is 11 months for a strong Indian Rupee, which has dropped since the Indian Rupee's recent depreciation. The Indian Dollar reserve for necessary imports like crude oil, etc., has decreased as a result of the INR's 6% YTD decline versus the USD.
The Indian Rupee may continue to appreciate, according to Anuj Gupta, and it may soon hit the 89 and 88.70 levels vs the USD.
Has Dalal Street's Santa Rally started?
Seema Srivastava, Senior Research Analyst at SMC Global Securities, discussed how the Bank of Japan's decision to raise interest rates would affect the Indian stock market. She stated, "Globally, Japan's rate increase represents a gradual shift away from ultra-easy monetary policy, which can marginally tighten global liquidity and raise volatility in carry trades, but its impact is likely to be slow and measured rather than disruptive for Indian equities." The Federal Reserve's policy and economic data continue to determine the direction of the US market; a soft landing scenario with moderate growth and declining inflation is still favorable for risk assets, but any significant increase in bond yields or rekindled inflation concerns could cause short-term risk aversion in emerging markets."
According to the SMC expert, despite periods of dollar strength, the Indian Rupee has stayed comparatively steady because of strong foreign exchange reserves and controllable current account dynamics, which lower the possibility of abrupt capital outflows. Another important factor is commodity prices, and India benefits from the lack of a prolonged increase in crude oil prices since it helps reduce inflation, fiscal pressure, and corporate input costs. Base metals, on the other hand, show consistent but not excessive worldwide demand.
"Domestically, India continues to stand out with comparatively strong GDP growth, improving private and public capex cycles, healthy banking system balance sheets, and reasonable earnings visibility across financials, infrastructure, and manufacturing," said Seema.
Rebounding from 52-DEMA support, the Nifty 50
Professional CA Seema Srivasta commented on the Nifty 50's recent recovery, saying, "The next leg of the rally will need to be earnings-led rather than liquidity-driven." Overall, the likelihood of a steady market bounce is increased by the recovery from the 50-DEMA. However, rather than a dramatic, straight-line upward shift, its sustainability will depend on stable global conditions and steady local earnings delivery."
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