Indian rupee finds its footing as oil worries cool, traders watch flow momentum
- Indian rupee's reaction was more tepid with a 0.2% gain to end at 94.4750 dollar
MUMBAI: The Indian rupee ended at its strongest level in two weeks on Thursday as oil prices eased below $100 per barrel on hopes that the risk of escalation in the Iran war has diminished after Republicans lost control of the US Congress.
Easing oil prices lifted Indian stocks to their best day in 7 months while bond yields dropped to their lowest in more than one month on easing investor anxiety over the economic impact of high energy prices on the world’s third-largest oil importer.
The Indian rupee’s reaction was more tepid with a 0.2% gain to end at 94.4750 dollar, tracking gains in most Asian currencies.
Dollar-rupee forward premiums, which reflect the cost of hedging against rupee weakness, also eased as traders took comfort in a global relief rally.
MSCI’s gauge of global equities rose slightly with gains and losses dispersed across markets seen as beneficiaries of lower energy costs and those exposed to tighter regulation of the AI sector.
Stocks in South Korea, a bellwether for AI sentiment, dropped over 5% while futures pointed to a weak start for the tech-heavy Nasdaq index.
“As the dust settles on the US elections, the sustainability of the relief rally will hinge on the US policy outlook, particularly decisions regarding the West Asia crisis, fiscal and debt dynamics, and AI-related investment policies,” analysts at DBS said in a note.
Traders are keeping a close eye on the improvement in foreign inflows into Indian stocks. Sustained flows are key for lifting the rupee.
Foreign investors net bought stocks worth $769.65 million on Wednesday, as per provisional data. This marked one of their biggest single-day buys in India since October 2025 took this month’s tally to $1.57 billion.
A durable improvement in flows would also give the central bank an opportunity to allow some of its existing dollar sales in the non-deliverable forward market to mature without renewing pressure on the rupee, a trader at a Singapore-based hedge fund said.
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