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The Indian currency hit its strongest level since early September as foreign inflows linked to Jio Platforms’ $3.2 billion IPO boosted demand for the rupee, while Brent crude above $110 a barrel and falling equities limited its gains.
The Indian rupee strengthened on Wednesday, supported by foreign portfolio inflows linked to Jio Platforms’ initial public offering (IPO), although elevated crude oil prices and losses in domestic equities tempered the currency’s gains.
The rupee closed 0.5 per cent higher at 94.46 against the US dollar after touching an intraday high of 94.43, its strongest level since early September.
However, the currency pared some of its gains in the second half of the session as crude oil prices climbed and Indian equities weakened. Brent crude futures rose 1.3 per cent to above $110 a barrel, while the benchmark Nifty 50 declined 0.7 per cent.
Escalating tensions in the Middle East added to concerns over potential oil supply disruptions. Oil prices rose after Iran told Pakistan’s army chief that it would not hold talks with Washington until its demands were met.
Jio IPO inflows support rupee
Foreign portfolio inflows associated with Jio Platforms’ $3.2 billion IPO provided support to the Indian currency. The offering, India’s largest share sale, was fully subscribed in less than two hours of public bidding on Wednesday as investors rushed to participate.
More from BusinessMarket participants are also watching key technical levels for the rupee against the dollar.
“With USD/INR holding below 95.00, focus shifts to 94.80–94.70. A sustained break below 94.80 could open the way towards 94.00 over the coming weeks, keeping the near-term outlook favourable for the rupee,” said Amit Pabari, managing director at foreign exchange advisory firm CR Forex.
Elsewhere, Asian currencies were largely rangebound, while the dollar index remained little changed at 101.8.
RBI rate outlook in focus
Investors will now turn their attention to the minutes of the Reserve Bank of India’s latest monetary policy review, held earlier this month.
The RBI raised interest rates for the first time in four years on October 7 and signalled that further hikes could follow as inflationary pressures persisted.
Data released last week showed that India’s retail inflation accelerated to 5.54 per cent in September, exceeding market expectations.
Swap markets are currently pricing in more than 100 basis points of RBI rate hikes over the next 12 months, reflecting expectations of further monetary tightening.
For the rupee, the outlook will depend on the balance between foreign capital inflows, movements in crude oil prices, domestic inflation and the trajectory of US dollar demand. While IPO-linked inflows have provided near-term support, sustained increases in oil prices remain a key risk for India’s import-dependent economy.
