Rupee slips with traders clinging to equity cues, awaiting inflation data

The Indian rupee retreated on Thursday after oil prices rose and domestic equities reversed, erasing early gains driven by a pickup in foreign portfolio inflows, while traders also awaited India's inflation data due later in the day.

The rupee closed at 94.0425 per dollar, down 0.4% from its previous close at 93.69.

Foreign portfolio inflows inject dollar supply into the rupee market, aiding the currency. A pickup in flows helped boost the rupee to a peak of 93.62 in early trading - its strongest level since April. The currency eventually pared gains as oil prices turned higher and local stocks gave up intraday gains to trade flat.


Strong dollar bids from a state-run lender also weighed on the rupee in afternoon trade, while a clutch of other public sector banks were seen offering dollars near the 94 mark.

Elevated oil prices threaten to slow growth and lift inflation in India. Traders will pay close attention to the October consumer inflation data due at 4 p.m. IST on Thursday.

Higher oil prices and a weak monsoon have contributed to cost pressures in India, prompting markets to price in nearly 100 basis points of policy rate hikes by the RBI over the next 12 months.

Economists polled by Reuters expect the data to show that headline CPI rose 5.93% last month, nearing the upper limit of the Reserve Bank of India's inflation tolerance band.

"We expect three more 25bp hikes from the RBI over the next three meetings, taking the terminal rate to 6.25%, vs around 100bp of tightening priced in INR OIS market over the next 12 months," analysts at Goldman Sachs said in a note.

Higher policy rates raise the cost of betting against the rupee, deterring speculative positioning. Expectations of higher policy rates and improved flows have contributed to improving sentiment on the local unit with bearish wagers hitting their lowest since June 2025, per a Reuters poll.