US Dollar experienced heightened volatility; DXY declined over 4% on US tariff announcement

Business Standard

3 days ago

The US Dollar experienced heightened volatility, as per SEBI annual report for 2024-25. The Dollar index peaked at a two-year high in January 2025, before declining by over four per cent during February-March 2025 following the announcement of US tariffs. The INR/USD rate traded within the range of '83-84 during the first half of 2024-25, before showing a depreciating trend, particularly in February 2025, driven by broad-based dollar strength and significant FPI outflows from Indian markets. During 2024-25, the foreign exchange market faced significant turbulence, with major currency pairs undergoing heightened volatility and rapid fluctuations, the exchange board noted. Central banks policy actions along with rising geopolitical tensions and trade conflicts, impacted both business operations and the economic outlook.
While US dollar and various other currencies showed intermittent periods of strength, weaknesses emerged in the latter half of the year due to adverse global economic and trade war situation. At the end of 2024-25, Indian Rupee depreciated by 2.5 per cent to close at 85.5 against USD after touching its historic low of 87.4 on February 05, 2025. Among other currencies, Russian Rouble appreciated the highest by 10.3 per cent over USD, followed by South African Rand (3.3 per cent), British Pound (2.3 per cent), Japanese Yen (0.9 per cent) and Euro (0.2 per cent). On the other hand, along with Indian Rupee, Brazilian Real and Chinese Renminbi depreciated 13.7 per cent and 0.5 per cent respectively during the year, SEBI noted.