In just a month, the INR rose in strength by 0.64%. Now, the rupee is 81.94 per US dollar compared to the previous week’s 82.18 per US dollar.

One of the reasons for the INR’s rise in strength is the gains achieved in the local stock markets. Because the rupee crossed a critical benchmark for the first time in a year, more profits could be made. The re-balancing of the FTSE and Sensex on Friday led to a surge of inflows into the Indian market, according to traders.

Foreign investors are optimistic regarding the growth of the Indian market - foreign investments in the country’s stock market these past few weeks have greatly benefited the rupee.

The weakening of the USD index is a result of the raised interest rates by the European Central Bank (ECB). The decline of the USD index to its lowest in five weeks positively impacted emerging market currencies, including the rupee.

The US Federal Reserve recently decided to pause tightening leading to rate hikes implemented by the ECB and possible further tightening. The US Federal Reserve had previously implemented rate hikes in 10 consecutive policy meetings starting from March 2022.

The expected trade range of the rupee over the near future is 81.80 - 82.70 according to the Treasury Consultant CR Forex Advisors.