The Indian rupee strengthened to 94.35 per dollar on Thursday, up from 94.46. This rise was supported by large foreign inflows from the Jio Platforms IPO. The rupee is on track for an eight-day winning streak, recovering from near record-low levels earlier this month. The IPO raised $3.2 billion and was fully subscribed within hours of its opening, helping the rupee rebound.
Key Details
Despite the positive impact from the IPO, concerns over rising oil prices remain. Brent crude oil rose nearly 2% to $110.6 per barrel. This increase is driven by geopolitical tensions in the Middle East, especially after the U.S. decided to withdraw some diplomats from Saudi Arabia. Analysts noted that while the IPO inflows have helped the rupee, ongoing volatility in oil prices could pose risks to the currency's stability.
Background
Market expectations for further interest rate hikes by the Reserve Bank of India (RBI) also supported the rupee. The RBI raised rates for the first time in nearly four years earlier this month. Minutes from the October policy meeting showed a more hawkish stance than previously communicated. The rupee's recent strength has pushed its 14-day relative strength index to nearly 74, indicating it is in an 'overbought' condition.
The rupee's rise is likely to influence trading in Indian equities. It could also affect sectors sensitive to currency changes, especially those reliant on imports. However, high oil prices may limit further gains in the currency. Investors will watch for updates from the RBI regarding future rate hikes and any developments in global oil markets that could impact the rupee's path.
Watch for the upcoming RBI meeting, where further monetary policy decisions will be discussed.
Based on reporting by: livemint.com, moneycontrol.com