Rupee hits seven-month high of 93.69 as FPI inflows, crude dip

The Indian rupee closed at 93.69 per US dollar on Wednesday, a seven-month closing high, strengthening 24 paise from the prior close of 93.93, according to BusinessLine. The currency traded between 93.62 and 93.87 during the session.

BusinessLine attributed the move to heavy foreign portfolio investment into Indian equities and lower crude prices. Dilip Parmar, Senior Research Analyst at HDFC Securities, said the rupee was helped by softening crude, strong foreign institutional inflows and the absence of central bank intervention in a risk-on market, though a rebound in the dollar after Tuesday’s inflation figures limited the appreciation.

Also read: Indian stocks seen opening higher as crude eases, FII inflows swell

Key facts

• The rupee closed at 93.69 per dollar, up 24 paise from 93.93, with an intraday high and low of 93.62 and 93.87.
• Parmar put near-term resistance for spot USDINR at 94.10 and support at 93.50.
• Yields on the benchmark 10-year G-Sec (GS2036) rose 6 basis points to 7.21 per cent from 7.15 per cent, tracking higher US Treasury yields after October US CPI came in at 0.4 per cent against an expected 0.3 per cent.
• According to Crypto Briefing, the Nifty reached 25,402.10 and the Sensex 82,467.26 in early trading, eight-month highs, as Brent crude fell to a two-month low of $89.16 a barrel.
• Crypto Briefing reported foreign portfolio investors put $5.68 billion into Indian equities in November.

Equities and crude add support

Crypto Briefing framed the stock gains around the same two drivers: a cheaper oil import bill after Brent’s slide and a large inflow of foreign capital into Indian stocks. The two reports describe the same market session from different angles but do not conflict on figures, since BusinessLine covers the currency close and yields while Crypto Briefing covers equity index levels and the scale of November FPI flows, which BusinessLine describes only qualitatively as robust.

Why it matters

A stronger rupee lowers the local cost of imported crude for Indian refiners and consumers, and the combination of equity inflows and weaker oil tends to lift both the currency and stock indices at once. Government bond yields moved in the opposite direction, so borrowers and holders of G-Secs face slightly higher yields even as the currency firms. For exporters, a rupee near a seven-month high trims the local-currency value of dollar earnings.

Also read: Dollar Index Hits 1.5-Year High as Crude Oil and Fed Talk Lift Greenback

The longer view from Axis Bank

Axis Bank’s Economic Research Division, in a report by Tanay Dalal, Senior Vice President, and Anshika Singh, Manager, argued that more fragmented AI regulation and slower US expansion could return some lost savings to India. A reversal of the past 12 months’ FPI outflows could bring the financeable current account deficit back to 0.8 per cent of GDP and move the rupee’s fair value closer, they wrote. They also cautioned that forex adequacy remains low and rebuilding it is likely to keep the INR weaker than fair, that maturities in the 3-5 year bucket are heavy, and that lower crude may not make a large difference since the INR began losing value when the CAD was low. The division kept its FX view targeting INR at 100 by June 2027 for now, expecting recent momentum to fade in favour of fundamentals.

What to watch

Parmar said market participants will look to India’s CPI data, scheduled for the following day, for the rupee’s next move. Beyond that, the traders’ levels of 94.10 resistance and 93.50 support, further moves in crude and the durability of November FPI flows are the concrete inputs to watch.

Views on the rupee’s path, including the June 2027 target and the resistance and support levels, are forecasts rather than certainties. This is not financial advice, and currency and equity markets are volatile and can move against expectations.

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Sources: BusinessLine, Crypto Briefing