The rupee reached 93.69 per dollar on Wednesday, trimming its year-to-date losses to around 4% after rebounding from a record low set in May. Foreign portfolio investors fueled this recovery by channeling nearly $6 billion into Indian equities throughout November, recording their largest monthly purchases since September 2024. These inflows offset broader dollar gains backed by firm expectations for an impending U.S. interest rate hike. Domestic attention is now turning to incoming inflation numbers, which are projected to show accelerated price pressures.
Key points
Strong equity inflows and non-deliverable forward sentiment have steadily helped the rupe…: Strong equity inflows and non-deliverable forward sentiment have steadily helped the rupee rebound from May record lows.
Robust domestic investment flows are currently shielding local assets from a globally str…: Robust domestic investment flows are currently shielding local assets from a globally strong dollar driven by hawkish Fed policy.
A Reuters poll projects India's October consumer inflation will climb to 5.93% from 5.54%…: A Reuters poll projects India's October consumer inflation will climb to 5.93% from 5.54% in September.
Sources checked by our analysis pipeline: 1
The rupee ended at 93.69 per dollar, up 0.2% on day and after touching a high of 93.6350 in afternoon trading.
The unit has recovered since hitting a record low of 96.96 in May and threatening to breach it last month. It is now down about 4% year-to-date, nearly halving its losses from its worst point in the year so far.
On Wednesday, the Indian rupee gained strength against the dollar, reaching its highest point since April. This improvement was influenced by foreign investments in local stocks and upbeat sentiment in the non-deliverable forward market. Although inflation concerns in the US led to a stronger dollar, traders remained focused on foreign portfolio investments in Indian equities.
Traders pointed to broad-based dollar selling interest through the session, with activity in the NDF market too pointing to sentiment around the currency turning positive.
This helped the rupee stave off pressure from a broadly stronger dollar, which was lifted by hot inflation data and hawkish comments from Federal Reserve officials.
Traders are now fully pricing in a 25-basis-point rate hike in December, according…
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