Rupee hits two-week high as oil prices ease, foreign inflows support

The Indian rupee strengthened to its highest level in two weeks on Thursday as oil prices fell below $100 per barrel, following reduced fears of an Iran war escalation after Republicans lost control of the US Congress. The currency gained 0.2% to close at 94.4750 per dollar. Easing oil prices lifted Indian stocks to their best day in seven months and dropped bond yields to a one-month low, as investor anxiety over high energy costs on the world's third-largest oil importer subsided. Foreign investors net bought $769.65 million in Indian equities on Wednesday, one of their biggest single-day purchases since October 2025, bringing this month's total to $1.57 billion. Analysts at DBS noted the relief rally's sustainability depends on US policy decisions regarding the West Asia crisis, fiscal dynamics, and AI investment rules. Traders are monitoring foreign inflows, as sustained investment is key to further rupee gains and could allow the central bank to ease dollar sales in forward markets.