The Indian rupee surged by 40 paise on Friday, breaching the 84-mark against the US dollar for the first time in seven months, driven by robust foreign fund inflows and improving sentiment around India-US trade relations.

The local currency opened at 84.09 and appreciated to 83.90 during early trade, compared to Thursday’s close of 84.49. The rupee last touched this level on October 1, 2024, when it stood at 83.82.

Market analysts attribute the rupee’s strength to rising foreign investments in Indian equities and debt markets. In the last 11 trading sessions alone, foreign institutional investors (FIIs) have poured Rs.37,375 crore into Indian markets, signaling renewed confidence amid easing global volatility.

Despite a firm dollar index, expectations of India emerging as a viable alternative to China in global trade flows, particularly with the US, have buoyed investor sentiment. The dollar index, which measures the greenback against six major currencies, has weakened and now hovers near 99, further supporting the rupee’s upward trend.

Trade optimism between India and the United States has also played a key role. In a recent interview with American media, US trade negotiator Jamieson Greer said that the two nations are close to finalising a trade agreement. He confirmed ongoing engagement with Indian Commerce and Industry Minister Piyush Goyal, including high-level meetings and visits by negotiating teams.

Greer also commented on US Vice President JD Vance’s recent visit to India, highlighting the announcement of a framework to advance trade negotiations between the two countries.

With sustained foreign inflows, positive trade developments, and a softening dollar index, the rupee’s rally may continue in the near term, offering a favorable outlook for the Indian currency.

(With IANS inputs)