The Indian rupee nudged higher on Thursday, into a technically “overbought” zone, as chunky foreign inflows for Jio Platforms IPO added to tailwinds from recent regulatory measures that propped up the local currency .
The IPO-linked inflows helped the rupee gain to 94.35 per dollar, from its previous close at 94.46, despite higher oil prices. Brent crude rose nearly 2% to $110.6 per barrel on worries over hostilities in the Middle East after the United States ordered some diplomats to leave its missions in Saudi Arabia.
The sharp recovery has brought the rupee-dollar pair's 14-day relative strength index, a gauge of momentum, to nearly 74. A reading above 70 indicates the pair is overbought while below 30 signals it is oversold. The momentum has shifted sharply over the last two weeks, from 9 October, when the relative strength index had declined to about 27.
The rupee has also been supported by market expectations that Reserve Bank of India will deliver more rate hikes soon, after raising interest rates for the first time in nearly four years earlier this month. Minutes of the RBI's October policy meeting released after market hours on Wednesday signalled that policymakers reckon further tightening is necessary, but they also remain wary of an aggressive cycle over risks to growth.
“Our text-based net-hawkishness score…suggests that the October MPC minutes were more hawkish than the Governor's statement (on October 7),” analysts at Goldman Sachs said in a note. “We continue to expect a 25bp repo rate hike in December 2026, followed by another 50bp of hikes in 1H CY27.”