Despite Crude Oil Crossing $110, Rupee Rises 53 Paise To 6-Week High As Jio IPO Boosts Inflows

Rupee surged 53 paise to close at 94.38 against the US dollar on Wednesday, reaching a six-week high thanks to foreign inflows linked to Jio Platforms IPO and RBI measures. Analysts expect the rupee to retain a positive bias if the dollar weakens.

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Rupee climbs 53 paise as Jio IPO inflows support currency recovery

The Indian rupee strengthened sharply against the US dollar on Wednesday, rising 53 paise to close at 94.38. Foreign currency inflows linked to Reliance Industries’ Jio Platforms initial public offering (IPO), along with intervention by the Reserve Bank of India (RBI), supported the recovery.

However, forex analysts warned that rising crude oil prices and losses in domestic equity markets could limit further gains. The rupee’s recovery comes amid concerns over potential oil supply disruptions and continued uncertainty in global markets.

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Rupee opens lower but stages a strong recovery

At the interbank foreign exchange market, the rupee opened at 94.78 against the dollar. It moved between an intraday high of 94.35 and a low of 94.82 before settling at 94.38, up 53 paise from its previous close.

The currency had last closed at a similar level on September 4, when it ended at 94.43 against the dollar.

On Monday, the rupee had slipped two paise to close at 94.91. Forex markets remained shut on Tuesday due to the Dussehra holiday.

Anuj Choudhary, research analyst at Mirae Asset Sharekhan, said the rupee had reached a six-week high, supported by IPO-related foreign inflows and a relatively weak US dollar. However, weak domestic markets and elevated crude oil prices capped the currency’s gains.

He expects the rupee to maintain a positive bias if the dollar remains weak and US Treasury yields soften. The USD-INR spot rate is expected to trade between Rs 94.20 and Rs 94.80.

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How Jio Platforms' IPO helped the rupee

Reliance Industries’ Jio Platforms opened its Rs 30,213-crore IPO for subscription on Wednesday. The issue, which closes on October 23, has a price band of Rs 1,065 to Rs 1,119 per share. It was fully subscribed within 100 minutes of opening, making it the fastest-ever subscribed IPO.

Large public offerings can support the rupee when foreign investors bring in dollars and convert them into the domestic currency to buy shares. This increases the supply of dollars in the local foreign exchange market and can help the rupee appreciate.

Gaurav Garg, head of research at brokerage platform Lemonn, said foreign inflows linked to large IPOs had supported the currency. He added that RBI measures to reduce spot-market dollar demand from oil companies and manage excessive exchange-rate volatility had also helped.

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Crude oil prices remain a key concern

The rupee’s recovery faces a significant challenge from rising oil prices. Brent crude, the global oil benchmark, was trading 1.99% higher at $110.96 per barrel in futures trade, amid renewed Middle East tensions and fears of supply disruptions.

Higher crude prices can increase India's import bill because the country relies heavily on overseas oil supplies. This can raise demand for dollars and put pressure on the rupee.

A stronger rupee, meanwhile, can reduce the cost of imported crude, electronics and other raw materials. It may also benefit sectors such as aviation and oil marketing, although the actual gains depend on companies’ hedging positions and pricing decisions.

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Dollar and stock markets weigh on sentiment

The dollar index, which measures the US currency against a basket of six currencies, rose 0.07% to 101.59.

Domestic equities also ended lower. The Sensex fell 143.21 points to 73,709.69, while the Nifty declined 77.60 points to 22,811.35.

Foreign institutional investors, however, bought equities worth Rs 1,022.32 crore on a net basis on Wednesday, according to exchange data.

Garg said the rupee’s ability to sustain its recovery would depend on IPO-related inflows, RBI intervention, crude oil prices, foreign portfolio investment and movements in the US dollar.

(With inputs from agencies)