Why the rupee strengthened despite weak equities today

The Indian rupee strengthened sharply in early trade on Thursday (February 12), rising 38 paise to 90.40 per US dollar, after weakening the previous day. The move reflected a combination of local liquidity conditions, foreign fund flows, and relatively stable global cues rather than any single dramatic trigger.

What happened today?

The rupee opened weaker at 90.55 but quickly gained ground and touched 90.40 against the dollar in morning trade. This marked a reversal from Wednesday (February 11), when the currency had slipped 22 paise to close at 90.78.

Traders attributed the appreciation primarily to two domestic factors — steady foreign portfolio inflows into equities and ample rupee liquidity in the banking system.

Why did the rupee strengthen?

Foreign inflows offered support

Foreign institutional investors (FIIs) bought Indian equities worth ₹943.81 crore on Wednesday (February 11). While not a massive inflow, traders said the steady buying provided a psychological anchor for the rupee and encouraged some dollar selling in early trade.

RBI’s liquidity stance mattered more than headlines

Market participants pointed to what they described as quiet but effective liquidity management by the Reserve Bank of India.

According to CR Forex Advisors MD Amit Pabari, banking system surplus liquidity stood near ₹3 lakh crore — the highest in six months — leaving banks flush with cash and reducing stress in money markets. This environment generally favours a steadier rupee.

Global cues were calm, not disruptive

Asian currencies were mixed and range-bound after stronger-than-expected US jobs data for January. Although the payroll numbers initially pushed up US Treasury yields and the dollar, analysts cautioned that the data could be revised and may not signal a sustained rebound in the labour market.

The dollar index was marginally down at 96.78, suggesting no strong dollar surge that could have pressured the rupee. With global moves muted, local factors took the lead in determining the rupee’s direction.

What risks still hang over the rupee?

Despite Thursday’s (February 12's)  gain, traders highlighted several ongoing headwinds:

• Crude oil prices: Brent crude hovered around $69.69 per barrel, still high enough to keep India’s import bill elevated — a persistent negative for the rupee.


• Geopolitical tensions: Unresolved global conflicts continued to limit risk appetite.


• US–India trade uncertainty: Markets remain cautious after revisions to the White House fact sheet on the trade deal, which outlined potential tariff reductions by India on US goods and farm products.


• Steady dollar demand: Importers and corporates continued to buy dollars in the background.

-With agencies inputs