Indian Rupee Struggles at Record Lows

The Indian rupee fell to around 94.8 per dollar, retreating from multi-week highs as rising oil prices and a global flight to safety weighed on the currency, while persistent dollar demand added to downward pressure. Brent crude climbed to nearly USD 115 a barrel amid concerns over supply disruptions following Houthi attacks on Saudi Arabia, raising India’s import costs and potentially prompting further hedging by importers. The decline ended the rupee’s eight-session rally, which had lifted the currency to a more than six-week high near 94.30. Meanwhile, market participants had digested preliminary economic indicators showing India's manufacturing PMI eased to 54.9 in October from 55.1 in September, while the services PMI rose to 56.2 from 55.2, marking a four-month high. Although the RBI’s recent foreign-exchange measures have curbed dollar demand and provided some relief, underlying pressures from elevated oil prices and capital outflows continue to threaten the rupee’s recovery.

The Indian rupee strengthened to around 94.4 per dollar, reaching its highest level since early September, as Reserve Bank of India intervention, inflows related to the Jio Platforms IPO, and the unwinding of long-dollar positions in the non-deliverable forward market supported the currency. The rupee extended its winning streak to eight sessions, recovering more than 2% after nearing record lows earlier this month, following RBI measures to redirect oil-related dollar demand away from the spot market and raise the cost of certain importer hedges. Strong institutional demand for the Jio IPO and foreign banks' dollar selling further supported the rally, while a break below the 94.70 level encouraged additional position unwinding. However, elevated oil prices remained a downside risk, as higher crude costs could widen India’s import bill and increase demand for dollars.

The Indian rupee hovered near 94.9 per dollar, pausing gains after reaching near six-week highs as importer dollar demand and weakness in domestic equities offset support from easing crude oil prices. The Nifty 50 fell more than 1%, weighed down by information technology and financial stocks, while Brent crude declined about 2% to $108 a barrel following a US waiver of some Russian oil sanctions. Meanwhile, the Reserve Bank of India has stepped up scrutiny of large overseas investments by domestic companies to contain capital outflows, requiring banks to conduct more detailed assessments of transactions exceeding $1 billion or four times a company's net worth. The move adds to recent currency hedging curbs and efforts to limit dollar demand amid persistent rupee weakness. Investors are also awaiting the minutes of the RBI's October policy meeting for clues on further rate hikes. Markets are closed on Tuesday in observance of Dussehra and will resume on October 21.