The rupee rose to a six-month high on Friday as crude oil prices fell to $96.95 per barrel. FPIs bought $1.5 billion worth of equities, helping the currency gain. “The RBI initially intervened in the forex market as crude oil prices approached $100 per barrel,” said a private bank dealer.
Crude oil prices declined 1.36% to $96.95 per barrel on Friday, easing concerns over India’s import bill and providing support to the rupee. The rupee began recovering after Democrats swept the US midterm elections, raising hopes of de-escalation in the West Asian conflict.
The rupee has appreciated 1.08% so far in November. In the calendar year, the depreciation stood at 4.5%.
Currency dealers said the RBI’s dollar sales in the forex market also helped support the rupee’s appreciation.
“The RBI initially intervened in the forex market as crude oil prices approached $100 per barrel. Later in the day, foreign fund inflows provided further support to the rupee, driving its appreciation,” said a dealer at a private sector bank.
He added that the rupee could strengthen further towards 93.50, provided favourable conditions persist and the RBI continues to support.
“Fueled by heavy foreign inflows and sliding crude prices, market sentiment went into overdrive amid a parabolic rally in domestic equities sparked by the buzz around the “Anti-AI” trade and ease of geopolitical uncertainties,” said Dilip Parmer, research analyst, HDFC Securities.
FPIs bought $1.5 billion worth of equities on Friday, taking their total purchases to $7.4 billion over the past 15 trading sessions.
Parmer expects the rupee to head south with support pegged at 93.50 and resistance at 94.30.
Market participants said crude oil prices, the sustainability of foreign inflows and developments in the West Asian conflict will be key drivers of the rupee’s movement going forward.