Rupee Hits 6-Week High on IPO Inflows

The Indian rupee hovered around 94.6 per dollar, strengthening to a six-week high after the holiday as expected dollar inflows from Jio Platforms’ IPO and continued Reserve Bank of India intervention supported the currency. The rupee extended its winning streak to seven sessions, gaining 5.18% year-to-date, as the central bank continued selling dollars and tightened scrutiny of large overseas investments to curb capital outflows. Investors are also awaiting the release of the RBI’s October policy meeting minutes later on Wednesday for clues on further rate hikes, following its 25-basis-point increase in the repo rate to 5.50%. 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.

The Indian rupee rose to around 94.76 per dollar, extending gains to five-week highs and climbing 1.8% this week for its strongest weekly performance since April, as traders unwound bearish positions and expectations of continued Reserve Bank of India dollar selling supported the currency. The RBI’s measures to curb speculative dollar demand and redirect oil companies’ purchases away from the spot market, alongside clarifications on forex hedging restrictions, are expected to ease market dislocations and improve liquidity. However, elevated oil prices, sticky inflation, and persistent foreign capital outflows continue to threaten the recovery. Hedging costs have climbed to their highest since 2016, while disruptions in the foreign-exchange market have pushed forward premiums higher and Indian government bond yields to more than three-year highs, highlighting the broader costs of the RBI’s currency defense.