US Treasury rout hands India's 10-year bond its worst day in a month

The Indian rupee touched its strongest level since April on Wednesday, shrugging off a broadly stronger dollar as foreign inflows into local stocks and price action in the non-deliverable forward market supported the currency.

The rupee ended at 93.69 per dollar, up 0.2% on day and after touching a high of 93.6350 in afternoon trading.

The unit has recovered since hitting a record low of 96.96 in May and threatening to breach it last month. It is now down about 4% year-to-date, nearly halving its losses from its worst point in the year so far.


Traders pointed to broad-based dollar selling interest through the session, with activity in the NDF market too pointing to sentiment around the currency turning positive.

This helped the rupee stave off pressure from a broadly stronger dollar, which was lifted by hot inflation data and hawkish comments from Federal Reserve officials.

Traders are now fully pricing in a 25-basis-point rate hike in December, according to the CME FedWatch Tool, and have baked in a slim chance of an outsized 50-basis-point hike as well.

"The case is increasingly building for the Fed to take rates into restrictive territory to slow aggregate demand and bring inflation back to target," analysts at ING said in a note.

While the prospect of higher policy rates in the US would typically be negative for the rupee, traders are currently more fixated on the pickup in foreign portfolio flows into Indian equity markets.

Foreign investors have poured in nearly $6 billion in November, their biggest monthly purchase since September 2024. On Wednesday, India's benchmark stock index, the Nifty 50 , rose xx%.

The focus will now turn to India's inflation data for October, due to be released on Thursday.

Annual consumer inflation likely rose to 5.93% in October from 5.54% in September, according to the median forecast in a November 2-6 Reuters poll of 36 economists.