Rupee marked a six-month high
The Indian rupee strengthened to 93.90 against the US dollar in afternoon trade on Friday, climbing to its highest level since April 22, as lower crude oil prices and renewed foreign investment flows improved sentiment towards the currency. It has gained around 1.2% this week, making it Asia's second-best-performing currency, after hitting a record low of 96.96 in May. The recovery comes amid a shift in global investment trends. After favouring technology-heavy markets in the US and North Asia for much of the year, investors are reassessing their exposure to artificial intelligence stocks amid concerns over valuations and the sustainability of large-scale infrastructure spending. India, with its broader equity market and domestic growth drivers, is increasingly attracting attention as an alternative. Foreign investors have bought nearly $3 billion worth of Indian equities this week, including $1.6 billion on Thursday alone, the biggest single-day purchase in nearly six years. The return of overseas capital after sustained withdrawals is providing an additional source of support to the rupee. "The recent appreciation in the rupee is backed by the supportive mix of softer crude oil, easing yields and renewed foreign inflows post the US midterm elections outcome," Dilip Parmar, a currency research analyst at HDFC Securities, said, as quoted by Reuters. Brent crude has fallen nearly 20% this week, putting it on course for its steepest weekly decline since April 2020, amid expectations that US President Donald Trump could seek to bring the Iran conflict to an end. India imports nearly 90% of its oil requirements, making the decline a significant relief for the economy. Lower oil prices are a "notable" tailwind for India, said Radhika Rao, senior economist and executive director at DBS Bank. She added that a relatively stable rupee improves dollar-denominated returns for foreign investors.
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