Indian rupee extends winning streak as dollar, oil ease and stocks rally

Mumbai: The Indian rupee reached a new high for the fourth consecutive day on Thursday, buoyed by a weaker dollar, lower oil prices, and a surge in stock markets, possibly due to central bank intervention. The Indian rupee closed 0.1% higher at 95.0550 per dollar, marking a 2% increase this week after it approached record lows last week.

Brent crude oil prices fell after potential U.S. measures to ease restrictions on Russia's "shadow fleet" tankers, despite ongoing supply concerns stemming from conflicts in the Middle East and between Ukraine and Russia. Indian stocks outperformed regional indexes, gaining around 2%, while South Korean to Japanese benchmarks declined between 8% and 2%, driven by AI-related debt funding worries.

Analysts suggest that investors should closely monitor AI issuers' debt and any further selling could pressure the dollar. The dollar index fell from an 18-month peak in volatile trading, as a sharp decline in Treasury yields undermined the greenback, and markets became more cautious about the Federal Reserve's potential rate hike this month.

Dollar-rupee forward premiums surged to multi-year highs on Thursday due to the central bank's recent forex curbs, which unsettled markets and limited liquidity, making it challenging for traders to manage exposures. India has utilized about half of the $140 billion it mobilized through special measures to bolster its foreign exchange reserves earlier this year, underscoring the pressure on the rupee and the central bank's resolve to stabilize it.

Thursday's data revealed that India's merchandise trade deficit in September was $30.21 billion, roughly as expected at $30.4 billion.