The Indian rupee closed on Thursday at its strongest level in two weeks as crude oil prices dipped below $100 a barrel. Traders said the move reflected hopes that the risk of a wider escalation in the Iran war has eased after Republicans lost control of the US Congress.
Lower oil prices lifted Indian equities to their best day in seven months. Bond yields fell to their lowest level in more than a month as investors worried less about how expensive energy could hurt the economy of India, the world’s third-largest oil importer.
Modest gain for the rupee
The rupee’s rise was more restrained. It gained 0.2% to finish at 94.4750 against the dollar, moving in step with most other Asian currencies.
Dollar-rupee forward premiums also eased. These premiums reflect the cost of hedging against rupee weakness, and their decline showed that traders felt more comfortable as a global relief rally took hold.
Mixed signals across global markets
MSCI’s index of global equities edged higher, but the gains and losses were spread unevenly. Markets seen as benefiting from cheaper energy rose, while those exposed to tighter regulation of the artificial intelligence sector came under pressure.
South Korean stocks, often watched as a gauge of sentiment toward AI, fell by more than 5%. Futures tied to the Nasdaq, which is heavy on technology shares, pointed to a weak opening for the index.
What could sustain the rally
Analysts at DBS said in a note that the durability of the relief rally will depend on the direction of US policy. They pointed to three areas: decisions on the West Asia crisis, fiscal and debt matters, and policies on investment related to AI.
Foreign money returns
Traders are paying close attention to the recent pickup in foreign inflows into Indian stocks, because steady inflows are seen as the key to a firmer rupee. Foreign investors net bought shares worth $769.65 million on Wednesday, according to provisional data. That was one of their largest single-day purchases in India since October 2025, and it pushed their total net buying for November to $1.57 billion.
A trader at a Singapore-based hedge fund said that if the improvement in flows proves durable, it could give the Reserve Bank of India room to let some of its existing dollar sales in the non-deliverable forward market run to maturity without renewing pressure on the rupee.
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