Rupee hits one-week high against dollar: What’s driving the trend

The Indian rupee gained 20 paise on Wednesday, March 5, hitting a one-week high of 87.06 per US dollar. The rally was largely driven by the dollar’s weakness, but the rupee’s gains were less pronounced compared to other Asian currencies.

Why is the rupee rising?

The US dollar slipped to its lowest level in 2025 as global funds moved out of US assets and into European markets.

Investors preferred European assets due to expected military spending and attractive valuations.

Additionally, concerns over rising tariffs in the US have weighed on the dollar’s appeal.

Back home, Indian corporates, including major exporters, have been selling long dollar positions, providing additional support to the rupee.

However, foreign portfolio investors (FPIs) have not yet made any significant moves to buy Indian equities or sell dollars, according to currency dealers.

How does the rupee compare to other Asian currencies?

While the rupee has strengthened, it lags behind some of its regional peers. The Malaysian ringgit, Indonesian rupiah, and Philippine peso have all posted stronger gains against the dollar on Wednesday (March 5).

Currency traders suggest that India typically sees strong dollar inflows in March, which could further support the rupee in the coming weeks.

Meanwhile, foreign institutional investors (FIIs) offloaded equities worth ₹3,405.82 crore on net basis on Tuesday (March 4), according to exchange data.