Rupee finally bounces back, closes at 93.90 on Friday, after hitting nearly 97/$ in May and Oct

The rupee pulled off a sparkling turnaround to emerge as Asia’s best-performing currency this week – just in time for a stellar Diwali – after the steepest weekly retreat in oil prices since April 2020 and nearly $4 billion of net equity purchases by foreign funds in the past fortnight eased pressure on the local unit.

The local currency closed at 93.90 on Friday, its best level since late April this year, as oil prices cooled and foreign investors returned to local assets. A post-midterm relief rally and short covering helped the rupee close 57 paise stronger from its previous close of 94.47.

After touching a record low of 96.96 late May, the rupee has recovered 3.2%. However, in the current financial year, it has gained just about 1% - from 94.83 on March 30.


Foreign portfolio investors (FPI) bought nearly Rs 15,000 crore from Indian equities on Thursday, the largest single day purchase since September 2024. On Friday, they bought equities worth Rs 13,750 crore, taking net investments in November so far to Rs 45,960 crore.

“The rupee has broken its range today and India is suddenly the safe bet for an ‘anti-AI’ trade,” said Anindya Banerjee, head, currency research, Kotak Securities.

India’s diversified industrial base is likely to appeal to FPIs as concentrated AI trades, which boosted chip-focused east Asian equities, are reversed in the immediate aftermath of the US midterms that have given the Democrats congressional control.

“The AI frenzy has sucked capital into a narrow sector and in a few, selected economies. Returns, at least for a while, have been stunning. But, given recent jitters, it’s worth widening the perspective again. That’s where India comes in,” Frederic Neuman, chief Asia economist, HSBC, said in a report Friday,

The rupee traded in a wide range of 94.52 and 93.83 on Friday, opening weaker and gradually strengthening through the day as oil prices traded around $97 per barrel.

Stronger levels triggered stop losses, further supporting the currency. Traders also said that exporter hedging has started over the past couple days, keeping a healthy balance between dollar demand and dollar sales.

“Exporter hedging has started over the past couple days. There were also stop losses hit for many and 93.60 levels remain key to watch out for now,” said Dilip Parmar, currency analyst, HDFC Securities. “The Reserve Bank of India, however, did not absorb any dollars to cap the appreciation.”

Last month, the central bank announced fresh measures to support the rupee, including opening a special window to provide dollars to government-owned oil importers directly from its forex reserves.

“I feel the central bank won’t absorb dollars and let the rupee strengthen. Their first form of intervention to cap appreciation would be to let the oil companies tap dollars directly from the market,” Banerjee of Kotak Securities said.