The Indian rupee ended nearly unchanged on Friday, marking its worst weekly performance since May due to surging equity outflows and rising crude oil prices amid escalating Middle East tensions. The rupee closed at 83.9725 against the U.S. dollar, almost flat compared to Thursday’s close.
Intervention by the Reserve Bank of India (RBI) limited rupee losses, preventing it from falling below the psychologically critical 84 mark. The RBI intervened in both non-deliverable forwards and local spot FX markets to stabilise the currency amid mounting external pressures.
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Foreign equity outflows weighed heavily on the rupee, with large foreign banks dominating dollar bids during the session. India’s equity indices, the BSE Sensex and Nifty 50, experienced over 4% declines this week, their worst since June 2022.
The rise in Brent crude oil prices to $78.1 per barrel, coupled with tightening regulations on equity derivatives trading and China’s recent stimulus measures, added to equity outflows from India. Foreign investors sold approximately $3.5 billion in local stocks over three trading sessions.
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Markets now await the U.S. non-farm payroll data for cues on future Federal Reserve rate cuts. Investors are uncertain whether the Fed will opt for a 50 or 25 basis points cut in November, which may further impact global currency trends.
