The Indian rupee (INR) appreciated by 0.5 per cent (m-o-m) during March 2025, supported by FPI inflows and year-end dollar receipts from inter-company borrowings; however, INR volatility rose driven by elevated global uncertainty, RBI’s April bulletin noted. The US dollar index (DXY) depreciated by 3.2 per cent in March and further by 4.4 per cent in April (up to April 14) as investors priced in a higher probability of a recession in the US. The MSCI currency index for EMEs increased modestly in March and remained broadly steady in April (up to April 14) despite capital outflows, in both debt and equity, mounting downside pressures. Meanwhile, the INR depreciated by 1.0 per cent (m-o-m) in terms of the 40-currency real effective exchange rate (REER) in March 2025 due to depreciation of the INR in nominal effective terms and widening of India’s inflation differential with its major trading partners, RBI report noted. As on April 11, 2025, India held foreign exchange reserves worth US$ 677.8 billion, sufficient for about 11 months of imports and 94 per cent of external debt outstanding at end-December 2024. At its current level, India holds the world’s fourth largest foreign exchange reserves.