FX.co ★ Rupee Lifted by FPI Inflows

The Indian rupee appreciated to approximately 90.4 against the dollar, building on gains observed in the previous week. This uptick results from investor speculation on whether optimism surrounding an interim trade agreement between the United States and India will lead to a consistent increase in foreign portfolio investments within Indian markets. Recently, international investors have made a return to Indian equities, recording net purchases of about $900 million, effectively reversing nearly $4 billion in net outflows that occurred in January. Despite this positive shift, traders remain wary about the longevity of these capital inflows and are closely watching global economic indicators for further clarity. Furthermore, the interim trade agreement is anticipated to enhance market access for Indian manufacturers of automobile components in the U.S. As part of the agreement, India is set to benefit from preferential tariff-rate quotas on auto parts, which had previously been subjected to elevated national security tariffs.