Rupee's Remarkable Recovery

The Indian rupee made a significant leap against the US dollar, closing at 86.04 on Friday, marking a gain of 64 paise from Wednesday's close. Despite this, the currency witnessed its worst weekly performance in two months, ending 0.9% weaker.

Global Dollar Weakness

The rupee's resurgence was fueled by a global downturn in the dollar's value, with the dollar index falling 0.7% to a three-year low. Rising fears of a US recession and shifts in US trade policy have diverted investor interest away from US assets, favoring Asian currencies instead.

Impact of US-China Trade Tensions

China's decision to hike tariffs on US goods to 125% in retaliation to US tariffs has further complicated the global trade landscape. The euro, yen, and Swiss franc have all gained ground as the dollar's safe-haven status wanes.

Market Reactions and Future Outlook

Traders are closely monitoring the yuan for indications of the rupee's future direction, with a weaker yuan potentially elevating the USD/INR rate. However, the prevailing dollar weakness may offset such movements.