Media365
The rupee gains for a seventh consecutive session as Jio Platforms IPO-related dollar inflows and RBI intervention support sentiment, while crude oil prices above $110 a barrel pose a risk
The Indian rupee strengthened 15 paise to 94.78 against the US dollar at Wednesday’s opening, supported by expected dollar inflows linked to the Jio Platforms initial public offering (IPO) and intervention by the Reserve Bank of India (RBI). However, rising crude oil prices and geopolitical risks could limit further gains.
The rupee had closed at 94.9250 against the dollar on Monday, October 19. Indian financial markets were closed on Tuesday for a holiday.
According to Reuters, the rupee has gained for seven consecutive trading sessions but has struggled to break past the 94.70-per-dollar level. Traders are watching whether IPO-related flows can provide fresh momentum.
How Jio Platforms IPO could support the rupee
The Jio Platforms IPO opened for subscription on Wednesday, October 21, following strong institutional demand. Bids for the anchor investor portion reportedly exceeded 30 times the shares on offer, Reuters reported.
Foreign investors often use sell-buy swaps to manage their dollar requirements around IPO allotments. They sell dollars for rupees in the spot market and agree to buy the dollars back later.
After shares are allotted, investors can unwind these positions and sell dollars outright to fund their investments. This can increase dollar supply in the domestic market and support the rupee. The impact will depend on actual investor participation and the timing of these transactions.
More from BusinessRBI support and crude oil risks
The RBI has also been selling dollars around the 95-per-dollar level, according to Reuters. Such intervention increases dollar availability in the market and can help limit pressure on the rupee.
However, elevated crude oil prices remain a key risk for the domestic currency. India imports a large share of its oil requirements, and higher prices can increase its import bill and demand for dollars.
Brent crude rose 1.5 per cent to $110.34 per barrel on Wednesday amid concerns about supplies from West Asia, including risks to Red Sea shipping and threats to oil infrastructure in Saudi Arabia, Reuters reported.
If oil prices remain elevated, increased demand for dollars from importers could offset some of the support from IPO-related flows and RBI intervention.
What to watch next
The rupee’s near-term direction will depend on the balance between dollar inflows linked to the Jio Platforms IPO, RBI intervention and demand for dollars to pay for imports.
A sustained move beyond the 94.70-per-dollar level could signal further near-term strength. However, crude oil prices and broader geopolitical developments remain key factors that could determine whether the rupee extends its recent rally.
