The Indian rupee opened at 93.81 against the US dollar on Monday, November 9, marking a 10 paise gain from its previous close of 93.91. This recovery was driven by improved sentiment in global technology stocks and a rebound in foreign investment flows into Indian equities.
Over the past week, the rupee has strengthened by more than 1%, supported by a surge in foreign portfolio investor (FPI) inflows and a decline in crude oil prices. Foreign investors injected over $4 billion into Indian equities last week, shifting focus from markets like South Korea and Taiwan, which had benefited from the artificial intelligence (AI) trade but faced selling pressure due to concerns over technology sector valuations.
The recent selloff in US and Asian technology shares, following the Democratic Party's midterm election victory, had raised concerns about the sector's outlook. However, these concerns eased by the end of last week, with the Nasdaq recovering on Friday, November 6, and South Korean and Taiwanese markets gaining on Monday, November 9.
A currency trader at a bank noted that the movement between AI-linked and non-AI-linked markets has become a key investment trend, influencing Indian equities and the rupee. The rupee's recovery was primarily supported by stronger foreign investment inflows and a sharp decline in Brent crude prices, which fell nearly 20% last week.
However, the rupee's gains could be limited by global interest rate expectations and movements in the US dollar. Most Asian currencies weakened on Monday after stronger-than-expected US payroll data raised expectations of a potential US Federal Reserve interest rate hike in December. Higher US interest rates could increase demand for the dollar, putting pressure on emerging market currencies, including the rupee.