- The Indian rupee hit its strongest level since April, closing at 93.69 against the dollar
- Rupee rally driven by strong foreign equity inflows and bullish offshore NDF market activity
- Softening crude oil prices and lack of central bank intervention supported rupee gains
The Indian rupee rallied to its strongest level since April on Wednesday, defying broader greenback strength as robust foreign equity inflows and bullish non-deliverable forward (NDF) trading bolstered sentiment.
The currency climbed 0.2% on the session to close at 93.69 against the U.S. dollar, having touched an intraday peak of 93.6350. The rebound marks a sharp turnaround from May's all-time low of 96.96—a level the currency threatened to breach again just last month. Year-to-date, the rupee is down roughly 4%, effectively halving the losses logged at its weakest point earlier in the year.
''The Indian rupee gained ground, buoyed by a softening in crude oil prices, strong foreign institutional inflows, and an absence of intervention from the central bank amid prevailing risk-on sentiment. Nevertheless, a rebound in the greenback following Tuesday's inflation figures restricted appreciation of the local currency. Participants will eye on India's CPI data, scheduled tomorrow for the next leg of move in the rupee. Over the near term, spot USDINR encounters resistance at 94.10, with support at 93.50,'' said Dilip Parmar – Senior Research Analyst, HDFC Securities.
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Three key triggers behind INR's rise:
FPIs turn net buyers
Market participants reported persistent, broad-based dollar selling throughout trading, alongside supportive positioning in offshore NDF markets. This internal momentum allowed the currency to shrug off headwinds from a firmer dollar, which found support elsewhere following hot U.S. inflation data and hawkish rhetoric from Federal Reserve officials.
Central bank rates
While rising U.S. interest rates traditionally weigh on emerging-market currencies, domestic sentiment has been dominated by a resurgence in overseas capital. Foreign institutional investors have injected nearly $6 billion into Indian equities in November alone—marking their largest monthly deployment since September 2024.
Softer Crude Oil Prices
Oil prices steadied on Wednesday from the previous session's two-month lows, after Iran's security chief said Tehran would not allow even a single particle of enriched nuclear material to leave the country. In the previous session, oil prices initially fell by more than $3 a barrel after US officials played down the need for further military strikes against Iran. Prices later pared some losses after an Iranian security official said no talks were taking place between the two sides.
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