India's battered rupee finds an unlikely rescue party in cheaper oil and Wall Street's AI rout

India's external pressures are showing signs of easing, with falling crude oil prices lowering the country's import bill and foreign investors returning to domestic equities after October's outflows, the Global Trade Research Initiative (GTRI) said. The developments have helped support the rupee, with the think tank expecting the currency to settle around ₹92–93 per dollar over the next few months if the favourable trends persist.

Foreign portfolio investors (FPIs) made net purchases of ₹53,739 crore in Indian equities between November 2 and 9, reversing net sales worth ₹34,843 crore in October. The turnaround coincided with a 24% decline in Brent crude prices, which fell from $118 a barrel on October 30 to $90 on November 10.

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The combination is easing pressure on the rupee by reducing the dollars India needs to pay for energy imports while bringing foreign capital back into domestic financial markets.

The rupee strengthened to ₹93.60 against the US dollar on November 10, compared with levels of ₹97–98 in March 2026.

The fall in crude prices has followed a change in the geopolitical risk outlook, with political developments in the US and Israel easing immediate concerns about further military escalation involving Iran.

For India, which depends heavily on imported crude, the decline offers relief beyond lower fuel costs. A reduction in the oil import bill also lowers the country's requirement for dollars to settle energy purchases, potentially easing pressure on the domestic currency.

The improvement in energy supplies could provide another cushion. A recovery in shipments of crude oil, liquefied petroleum gas (LPG) and liquefied natural gas (LNG) through the Strait of Hormuz and the Red Sea route via Bab el-Mandeb would help ease supply constraints and reduce the risk of another spike in energy costs.

The second source of relief is the return of foreign capital to Indian equities. FPIs, which had been net sellers in October, reversed course in the first nine days of November, buying a net ₹53,739 crore worth of shares.

The reversal comes after a sharp sell-off in US technology and artificial intelligence stocks wiped out an estimated $2.5 trillion in Nasdaq market value on November 5. The turbulence may have prompted some global institutional investors to reassess their exposure to US technology stocks and redirect part of their capital towards other markets, including India.

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The renewed foreign buying has helped arrest the decline in Indian equities and supported dollar inflows into the domestic market. However, the extent to which the US technology sell-off directly drove the shift towards Indian stocks remains unclear.

Together, lower oil prices and stronger portfolio inflows are improving the near-term outlook for the rupee. The two developments work through different channels: cheaper crude reduces India's demand for dollars, while foreign investment increases their supply in domestic markets.

GTRI's projection of the rupee settling around ₹92–93 per dollar over the coming months is conditional on these trends holding. A renewed escalation involving Iran, a rebound in crude prices or another reversal in foreign investor sentiment could undermine the recovery.

For now, the easing of oil-related pressure and the return of overseas investors are giving India's currency and stock markets some breathing room.