Indian Rupee: Oil surge offsets inflow support – Societe Generale

FXStreet Insights Team FXStreet

Societe Generale strategists highlight that the Indian Rupee (INR) stayed defensive as Brent Oil rose to $100, countering support from recent policy steps to attract capital inflows. The Reserve Bank of India (RBI) intervened in onshore and offshore markets with USD/INR near record highs, while inflows of about $20bn were reported. Higher Oil prices and a rebound in 1Y INR OIS to 6.05% dominate sentiment.

Rupee pressured by Oil and rates

"In contrast, the INR remained on the defensive as Brent surged to $100/bbl, offsetting support from recent policy measures aimed at attracting capital inflows."

"The RBI stepped up intervention in both onshore and offshore markets as USD/INR traded close to the record highs in May."

"The central bank noted that measures announced alongside the June MPC meeting had generated around $20bn of inflows through FCNR deposits, external commercial borrowings and overseas foreign currency funding."

"However, rising oil prices have overshadowed the positive flow story."

"Reflecting this shift, the 1Y INR OIS has rebounded to 6.05%, retracing nearly 25bp from the post-RBI lows."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold stalls recovery from three-month low as Fed hike bets and USD uptick cap gains

Gold struggles to capitalize on a modest intraday bounce from levels below the $4,000 psychological mark, or a three-month low set during the Asian session, and sticks to a negative tone for the second straight day. The Federal Reserve recently signaled that there is no urgency to raise interest rates. Traders, however, are still pricing in around an 80% chance that the US central bank will raise borrowing costs again at its December policy meeting.

Bitcoin, Ethereum, and Ripple rebound as major support levels cap recent sell-off

Bitcoin, Ethereum and Ripple rebound modestly on Friday after correcting and testing their key support zone the previous day. BTC holds the 50-day EMA, ETH finds support around the 100-day EMA, while XRP holds the horizontal floor near $1.300. The price action of these top three cryptocurrencies suggests a recovery if this critical support zone holds; a decisive close below these levels suggests a deeper correction.

The week ahead – UK budget, Shell, BP and HSBC and NatWest results

Financial markets have undergone another turbulent week with concerns about public sector debt levels, the impact of energy policy and higher oil and gas prices, and what events in France might mean for the UK economy going forward.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.