The Indian rupee strengthened for a sixth consecutive session on Friday, closing at ₹95.35 against the US dollar, up 15 paise from Thursday’s ₹95.50 close, itself a 26 paise gain marking the fifth straight session of gains.
Why the Rupee Keeps Rising
Sustained RBI dollar selling combined with a shift in foreign portfolio investor behavior is reportedly driving the rally. FPIs bought ₹7,360 crore worth of Indian equities over the past three days, reversing a period of heavy selling.
Analysts expect the rupee to trade between ₹95 and ₹95.60 near term, supported by a softer dollar and dovish Fed expectations. But renewed US-Iran tensions could cap that upside.
However, missile strikes between the two countries resumed Thursday, Jordan intercepted Iranian missiles for a second straight day, and a strike in northern Kuwait killed one person, all of which could push oil prices, and pressure on the rupee, higher again quickly.
Why This Matters for Crypto Buyers
Every major cryptocurrency prices in dollars first, then converts to rupees at purchase. A stronger rupee makes that conversion cheaper, even if Bitcoin or Ethereum’s dollar price hasn’t moved. If the dollar falls from ₹96 to ₹95.35, buying $1,000 of $USDT costs roughly ₹650 less than a week earlier.
The effect cuts both ways, though. When the rupee strengthens, the domestic fiat value of international crypto assets scales down at purchase, which also dampens local-currency gains if global crypto prices stay flat.
A stronger rupee also temporarily reduces the urgency for Indian investors to flee local fiat for dollar-backed digital assets as a hedge against depreciation, since the case for holding dollar exposure weakens somewhat when the rupee itself is strengthening
A Premium Complicates the Math
That math assumes $USDT trades near the real exchange rate. Crypto Banter had previously flagged that Indians are paying around ₹102.88 for $USDT that should cost roughly ₹94.65 at official rates, an 8.5% premium described as the largest seen in a long time.
Expert and CEO Deepak Shenoy traces the gap to enforcement action. $USDT was reportedly used by informal remittance services functioning like hawala for NRIs, technically illegal under FEMA. An ED crackdown on these channels cut off $USDT supply into India, breaking the arbitrage that normally keeps local prices aligned with the real dollar rate. Indian banks can hold dollars but can’t trade $USDT directly, something Shenoy says the RBI could change to collapse the premium.
What to Actually Watch
Indian tax authorities have also flagged crypto transactions as hard to track, per government papers reviewed by Reuters, with roughly 39 million Indian crypto traders holding an estimated ₹20,000 crore as of May. Until the $USDT premium closes, a stronger rupee is a necessary condition for cheaper crypto purchases in India, not a sufficient one.
Related: India’s Gen Z Is Fueling Record Crypto Adoption; Here’s How They’re Investing
