CURRENCY OVERVIEW

The Indian rupee opened strong on Monday, with a tentative pause in AI-related market jitters potentially slowing the diversification flows into local assets. The currency surged more than 1% last week, buoyed by a sizeable pick-up in foreign inflows into Indian equities and a ?decline in oil prices. Foreign investors poured more than $4 billion into Indian equities last week. South Korea and Taiwan, two markets that have benefited significantly from the AI trade, slumped last week, prompting foreign outflows. A selloff in technology shares across the US and Asia after the Democratic Party sweep in the US midterm elections on Wednesday stoked concerns that it could impact sector growth. That nervousness appeared to calm to an extent on Friday, with the Nasdaq recovering and futures pointing to a further advance. South Korean and Taiwanese markets ‌rose on Monday. A nearly 20% plunge in Brent crude prices last week provided an additional reason for foreign investors to favour Indian assets. For the rupee, capital flows and oil prices have been among the biggest sources of pressure over the past several months. A sustained turnaround in equity inflows, coupled with lower oil prices, could provide the currency with much-needed support. Meanwhile, most Asian currencies weakened on Monday after an upside surprise in US payrolls strengthened expectations that the Federal Reserve could raise interest rates in December. The US dollar traded not far from a 1-1/2-year high versus the euro and a seven-month high on the Aussie on Monday, after surging by the most in nearly six months on Friday as ‌robust US jobs data pushed up bets for higher interest rates. The US dollar index , which measures the currency against six major rivals including the euro, was steady at 102.20 early on Monday, after leaping around 0.7% on Friday, when data showed jobs growth accelerated in October while the unemployment rate fell. The euro edged up 0.1% to $1.11485, after slumping 0.7% on Friday and hitting a low of $1.1132, not far from the trough from a week earlier at $1.1105, the weakest since May 2025. The Aussie added 0.3% to $0.6875, after tumbling more than 1% on Friday to the lowest since March 31 at $0.6855. The dollar eased 0.2% to 158.185 yen , following Friday's 0.6% jump. Bank of Japan Governor Kazuo Ueda said on Friday the central bank expects underlying inflation to stay around its 2% target but recognises there are "some upside risks." Futures imply around 79% odds the US Federal Reserve will raise rates on December 9, compared to 71% a week earlier, according to CME Group's FedWatch tool. Sterling edged up 0.1% to $1.3360, while the greenback eased 0.1% to C$1.4119 . On Friday, the US currency surged 1.1% against Canada's loonie after Canadian data showed surprise job losses. The New Zealand kiwi climbed 0.4% to $0.5557 on Monday, bouncing back after hitting a low of $0.5529 at the end of last week. Oil prices fell at Monday's open after US President Donald Trump said he was highly unlikely to order new Iran attacks while talks to end the conflict make progress, despite both nations' reports of attacks on ships in or near ‌the Strait of Hormuz. Brent was down 84 cents, or 0.85%, to $97.48 a barrel by 0138 GMT, while West Texas Intermediate fell 32 cents, or 0.35%, to $90.51 a barrel.