The Indian rupee extended its winning streak to a seventh straight session on Wednesday, appreciating 29 paise to 94.62 against the US dollar in early trade as foreign inflows linked to Jio Platforms' blockbuster initial public offering and sustained support from the Reserve Bank of India bolstered the currency. The level marks the rupee's strongest showing in six weeks.
At the interbank foreign exchange market, the rupee opened stronger at 94.78 against the American currency and then gained further ground to touch 94.62, registering a gain of 29 paise over its previous close. On Monday, the rupee had settled lower by 2 paise at 94.91 against the dollar, while the forex market remained shut on Tuesday on account of Dussehra.
Traders said the currency's strength was primarily underpinned by foreign dollar inflows tied to the Jio IPO, which opened for public subscription on Wednesday, alongside active support from the central bank. The issue, the biggest share sale in Indian history, had already drawn robust institutional interest, with bids for the anchor portion totalling more than 30 times the shares on offer.
The rupee's revival is part of a broader rebound of more than two per cent after the currency had neared record lows earlier this month. Reuters reported that the rupee was expected to open in the 94.75–94.80 range on Wednesday, with traders watching whether the momentum could push it past the 94.70 level, which it has repeatedly struggled to break through in recent weeks.
The currency briefly touched 94.4925 at one point during the session before easing back to around 94.56, according to market reports.
The mechanics of the IPO inflows are well understood by currency traders. Foreign investors typically use sell-buy swaps to manage their dollar flows for IPO allotments, selling dollars for rupees in the spot market while agreeing to buy them back at a later date, usually in less than a week. Once shares are allotted, investors can unwind these positions and sell dollars outright to fund their investments, creating genuine dollar supply in the market.
Traders say this two-stage flow is supporting the rupee this week.
Apart from the expected IPO-related inflows, the rupee continued to draw support from persistent dollar sales by the Reserve Bank of India, which has been intervening around the 95-per-dollar level to prop up the currency.
The central bank has also rolled out a series of measures in recent weeks, including pushing some oil-related dollar buying away from the spot market and making certain importer hedges more expensive, alongside tighter scrutiny of large overseas investments to curb capital outflows.
Analysts say the RBI's multi-pronged approach has been instrumental in turning the rupee's fortunes around. TradingView's market note observed that the rupee had strengthened by 5.18 per cent so far this year, hovering around 94.6 per dollar as continued central bank intervention supported the currency.
Investors are also awaiting the release of the RBI's October policy meeting minutes later on Wednesday for clues on further rate moves, following its 25-basis-point increase in the repo rate to 5.50 per cent.
"This strength is primarily underpinned by foreign dollar inflows tied to the Jio IPO alongside support from the Reserve Bank of India (RBI)," said Aamir Makda, Commodity and Currency Analyst at Choice Broking. "To navigate dollar flows during the IPO allotment process, foreign investors are largely relying on sell-buy swaps — offloading dollars for rupees in the spot market while contracting to repurchase them within a short window, usually under a week."
Makda added that despite these positive drivers, elevated oil prices remain a significant headwind for the domestic currency. "Over the course of today's session, the rupee is expected to consolidate within a trading band of 94.00 to 94.75 against the dollar," he said.
That caution is widely shared on dealing desks. Brent crude, the global oil benchmark, was trading up 1.42 per cent at 110.33 dollars per barrel in futures trade, a level that worries traders because India imports the bulk of its energy. Higher crude costs can quickly widen the country's import bill and increase demand for dollars, eroding the gains from IPO inflows.
Finimize's market analysis noted that HSBC has flagged risks including a wide current account deficit and the RBI's large short foreign-exchange forward positions, suggesting attention may soon shift from the spot rate to what those forward bets imply for future dollar demand when they are rolled over or come due.
The dollar index, which gauges the greenback's strength against a basket of six major currencies, was trading 0.06 per cent higher at 101.58, capping the rupee's upside. A firm dollar typically makes it harder for emerging-market currencies to sustain rallies.
Domestic equities lent support to sentiment. In morning trade, the BSE Sensex climbed 665.10 points to 74,518, while the NSE Nifty 50 advanced 188.40 points to 23,077.35. However, foreign institutional investors remained net sellers of Indian equities, offloading shares worth 1,148.64 crore rupees on Monday, according to exchange data, even as domestic institutions absorbed the selling.
For importers and exporters, the rupee's recovery offers tactical opportunities. Currency strategists suggest importers use the strength to hedge upcoming dollar payables, while exporters hold out for levels closer to 94.95 where forward premiums remain attractive.
The question now is whether the recovery has legs. The Jio IPO inflows are inherently temporary, and once allotments are complete the special demand for rupees will fade. The durable drivers — RBI intervention, the policy rate differential, crude prices and the trajectory of foreign portfolio flows — will decide whether the rupee consolidates below 95 or drifts back towards its recent lows.
For now, though, Wednesday's move is a decisive signal that the central bank's defence of the currency, combined with the biggest equity event of the year, has shifted near-term momentum firmly in the rupee's favour.
The scale of the equity event behind the inflows is unprecedented for India. Jio Platforms' 3.2-billion-dollar share sale is the largest IPO in the country's history, and it was subscribed within two hours of the subscription window opening, setting a record for an Indian offering.
The sheer size of the transaction means that even a fraction of the expected foreign participation translates into meaningful dollar supply in the spot market, amplifying the impact of the central bank's own intervention. Market participants note that large offerings of this kind have, in past years, produced similar short-lived but powerful currency rallies in emerging markets, from Seoul to Mumbai.
Beyond the IPO, the broader macroeconomic backdrop offers both comfort and caution. India's domestic liquidity remains robust, with domestic institutional investors continuing to absorb foreign selling in equities, and the central bank's foreign exchange reserves give it ample firepower to defend the currency around psychologically important levels.
Yet the external environment is unforgiving: global crude prices near 110 dollars a barrel, a firm dollar index and elevated US bond yields all argue against excessive optimism. Currency strategists advise that the rupee's path from here will depend less on Wednesday's headlines and more on whether portfolio flows turn decisively positive once the IPO-related noise subsides.
(Reporting based on Reuters, The Economic Times and News18.)