Indian Rupee Rebounds to April High as Oil Prices Fall and Foreign Funds Flow In
The rupee closed at 93.90 per dollar, its strongest level since late April, while Indian equity indices rose more than 10% from recent lows, supported by lower oil prices and net foreign portfolio inflows of about $4 billion.
The Indian rupee ended the week at 93.90 per dollar, its best level since late April, after oil prices fell sharply and foreign portfolio investors bought roughly $4 billion of Indian equities in the past two weeks. The currency improved 57 paise from the previous close of 94.47, marking a 3.2% gain since a record low of 96.96 in late May.
Foreign portfolio investors purchased nearly ₹15,000 crore of equities on Thursday, the largest single-day buy since September 2024, and added another ₹13,750 crore on Friday, bringing net November inflows to about ₹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 of currency research at Kotak Securities.
Indian equity benchmarks also advanced, with the Sensex and Nifty each gaining more than 10% from recent lows and now sitting about 5% below their record highs. The rally has been attributed to strong corporate earnings, reasonable valuations, and the decline in crude oil prices, which have dropped over 20% in three sessions, easing inflation concerns.
"The durability of the rally will increasingly depend on earnings delivery. Valuations have become more attractive, but we remain selective and focused on fundamentals," said Ben Powell, chief investment strategist for the Middle East and APAC at BlackRock Investment Institute.
Companies that have reported so far posted average earnings growth of 25% year-on-year, according to Deepak Malik, CIO of Carnelian Mutual Fund. Malik added that continued earnings growth is likely to keep markets on an upward trajectory.
However, some analysts warned that the rally may be technical rather than a sustained recovery. "We need more confirmation on whether this is a technical rally or the start of something more interesting," said Shankar Sharma, founder of GQuant Investech.
Overall, the combination of lower oil prices, foreign fund inflows and solid earnings has helped the rupee and Indian equities recover after a prolonged bear market.