Updated on 3 April 2024
The Indian Rupee (INR) navigated a period of volatility against the US Dollar (USD) in March 2024.
However, unlike February's volatility, March witnessed a mix of appreciating and depreciating trends, influenced by a combination of global and domestic events.
The USD-INR exchange rate fluctuated between 83.60 and 82.75 with an average of 83.06 in March 2024.
The month started with the US dollar appreciating against the Indian Rupee.
The United States Federal Reserve (FED) leaves the interest rates unchanged at 5.25 percent - 5.50 percent. The impact of this on the exchange rate, like USD/INR, can be complex.
The Fed's decision signals a wait-and-see approach due to inflation concerns, which might have led to increased demand for the USD as a safe-haven currency, putting downward pressure on the rupee.
Economic data releases from the US, such as employment numbers or manufacturing reports, also boosted confidence in the USD.
With an average of 248,000 new jobs added monthly for the past six months, the US economy is showing significant job creation. The unemployment rate is just 3.7 percent.
However, the USD's dominance was short-lived. The latter half of March witnessed a trend reversal, with INR finding some support.
A strong GDP, like India's reported 8.4% growth, is generally positive for a country's currency.
Increased foreign investment in India, attracted by the strong GDP, might have led to more demand for rupees, causing the rupee to appreciate (strengthen) against the USD.
The Reserve Bank of India (RBI) might also have intervened in the market by selling USD and buying INR to curb further depreciation of the Rupee.
A strong services sector acts as a buffer against oil price shocks. India's growing exports in IT and other service industries potentially offset the impact of rising import bills from expensive oil.
Even though oil shocks might be less severe, a jump above $90 per barrel can still be concerning.
Interestingly, the exchange rate remained relatively stable in the latter half of the month. It is possible that certain sectors, like exporters, might have converted their USD earnings into INR towards the month-end for accounting purposes.
Overall, March 2024 painted a complex picture for the USD/INR exchange rate.
While the month began with the USD gaining appreciation, the INR displayed resilience, finding support and even managing to appreciate towards the latter half.
The USD-INR exchange rate is expected to remain volatile in the near future. The USD might strengthen due to the US economy, but the Indian economy's growth and potential RBI intervention could support the INR.
Live US Dollar Exchange Rates | |
USD Interbank Rate | ₹83.33 |
USD Buying Rate | ₹83.59 |
USD Selling Rate | ₹83.8785 |
USD Remittance Rate | ₹83.93 |