The Indian rupee was on the defensive on Thursday, pressured by a jump in oil prices and weakness in Asian peers even as likely central bank intervention kept the currency from testing record lows hit five months ago. The rupee ended nearly flat at 96.78 per dollar, within striking distance of its all-time low of 96.96 hit in May. Elevated oil prices, surging developed market bond yields and weak capital flows have battered the rupee this year, driving it down over 7% against the dollar - among the worst performances in the region. While persistent Reserve Bank of India intervention has offered some relief to the market, traders do not yet see a case to be bullish on the rupee. The dollar rose towards its strongest level in 18 months on Thursday, after minutes from the US federal Reserve signalled policymakers viewed inflation as the biggest risk to their outlook, while higher oil prices and rising euro zone bond yields have weighed on the euro. The global bond selloff has been the dominant driver in currency markets in recent weeks, with yields rising again on Thursday as oil prices jumped. The British pound was down slightly against the dollar and the euro on Thursday ahead of a speech from Bank of England Governor Andrew Bailey that could shape expectations for the central bank's next policy move. Sterling was last down 0.2% against the dollar at $1.3185, just above a three-month low of $1.3181 reached last week. The pound was down about 0.1% against the euro, snapping a nine-day streak of gains. It was last at 84.79 pence per euro . The euro has been under particular strain, falling to a 17-month low against the dollar as fiscal concerns in France pushed bond yields sharply higher, dampening expectations for further rate hikes from the European Central Bank. Gold prices edged up on Thursday after hitting a two-month low in the previous session, as investors assessed the minutes of the US Federal Reserve's September meeting for clues on its interest rate trajectory. Spot gold ?rose 0.3% to $4,122.12 per ounce by 1128 GMT, having touched its lowest level since August 5 on Wednesday as a firmer dollar and higher US Treasury yields weighed. On the geopolitical front, the number of vessels transiting the Strait of Hormuz fell to the lowest in more than two months after attacks on tankers in the key waterway reached their highest last week since the start of the Middle East war, shipping data showed. Among other metals, spot silver fell 2.2% to $58.8, platinum strengthened 1.0% to $1,647.30 and palladium climbed 0.7% to $1,133.00.
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The euro rebounded on Tuesday and was on pace for its strongest move higher in a month after falling to its lowest in 17 months in the prior day, as a pullback in French government bond yields cooled fears about strain in euro zone debt markets. The euro zone's currency climbed 0.28%, on track for its biggest daily gain since September 3, at $1.1252. the currency had slid to its lowest since May 2025 on Monday at $1.116, following a drop of more than 1% in the prior week, its fourth straight weekly decline. The dollar index , which measures the greenback against a basket of currencies, fell 0.26% to 101.89 and was on pace for its biggest daily drop since September 25. Bond markets around the world have seen yields rise due to expectations of sharp central bank rate hikes as energy prices have jumped due to the US-Israeli war with Iran and fanned inflation, as well as concerns about government finances. France is at the heart of the European market concerns. The French government is seeking to enact an unpopular 2027 budget to lower its deficit and contain its record-high debt load, a tall order in a deeply divided parliament as political factions position ahead of next year's presidential election. With inflation already rising on soaring energy costs and higher yields increasing household and corporate borrowing costs, further euro weakening could leave the European Central Bank caught between fighting inflation and calming bond markets.
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