The Indian rupee opened weaker on Thursday, with the ongoing revival in foreign equity inflows providing a counterweight to a resurgent dollar that has advanced ?to a one-month high. Foreign investors poured $1.34 billion into Indian equities on Wednesday, per provisional data, taking month-to-date inflows to just shy of the $8 billion mark. The scale of the reversal in foreign flows has been striking. Fears of tighter US restrictions on AI data-centre construction following the Democratic Party election win have unsettled the AI trade, prompting investors to pare exposure to semiconductor-heavy markets and redirect capital towards India, which is being seen as a diversification play. Before the November resurgence, foreign investors had pulled more than $30 billion from Indian equities so far this year. This has provided ?the rupee a much-needed lift, reinforcing the Reserve Bank of India's efforts to stabilise the currency. A retreat in oil prices has been an additional tailwind. Brent crude is hovering around $92 a barrel, down from a high of $118 ?less than two weeks ago. The dollar index held near a one-month high against major peers in Asian trading on Thursday, supported by mounting expectations of a Federal Reserve rate hike. Traders ramped up bets of further Fed tightening following higher-than-expected October inflation data and a series of hawkish remarks from US central bank officials. The dollar climbed to a 19-month high against major peers on Thursday, supported ?by growing expectations of a Federal Reserve rate hike, while the yen edged toward the key 160-per-dollar level following a dovish central banker's speech. The dollar index , which measures the greenback against a basket of currencies, rose by 0.15% to 103.02, the highest since April 2025. New York Fed President John Williams is set to appear on a panel late Thursday that will be closely watched given his "pre-October FOMC meeting views the Fed had time on rate hikes," said Gavin Friend, senior markets strategist at National Australia Bank, in a note. Against the Japanese yen , the dollar reversed an earlier decline to trade 0.04% higher at 159.83, underpinned by wide interest-rate differentials as traders increased bets on further Fed hikes. It hit a more than two-month high earlier on Thursday. The euro was up 0.06% against the US dollar at $1.1096 while sterling slipped 0.1% to $1.3266. The Australian dollar was little changed versus the greenback at $0.6847, while New Zealand's kiwi was down 0.05% at $0.5559. il prices dropped more than $1 on Thursday as hopes for progress in peace talks over the Middle East and the Russia-Ukraine ?wars pressured the market. Brent futures lost $1.14, or 1.2%, to $91.62 a barrel ?by 0141 GMT. US West Texas Intermediate (WTI) crude futures fell $1.04, or 1.2%, to $85.49. Brent rose about 1.4% and WTI 0.6% on Wednesday after hitting two month lows the previous day.
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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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