Business & Finance

Rupee Climbs to Six‑Month High as Oil Prices Drop and Foreign Investors Return

By Trisha Mahajan

The Indian rupee rose to 93.90 against the U.S. dollar in afternoon trade on Friday, its strongest level since April 22. The gain comes as lower crude oil prices and renewed foreign investment flows have boosted sentiment toward the currency. The rupee has appreciated about 1.2% this week, making it Asia’s second‑best‑performing currency after a record low of 96.96 in May.

The rally follows a shift in global investment trends. After favouring technology‑heavy markets in the U.S. and North Asia for much of the year, investors are reassessing exposure to artificial‑intelligence stocks amid concerns over valuations and the sustainability of large‑scale infrastructure spending. India’s broader equity market and domestic growth drivers are increasingly attracting attention as an alternative.

Foreign investors bought nearly $3 billion of Indian equities this week, including $1.6 billion on Thursday alone, the largest single‑day purchase in almost six years. The return of overseas capital after sustained withdrawals is providing additional 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 U.S. midterm elections outcome," said Dilip Parmar, a currency research analyst at HDFC Securities, as quoted by Reuters.

Brent crude has fallen nearly 20% this week, the steepest weekly decline since April 2020, amid expectations that U.S. President Donald Trump could seek to resolve the Iran conflict. India imports about 90% of its oil, so the price drop is 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.