Rupee Slides 0.3% to 94.24 as Hawkish Fed and Oil Spike Erase Six-Month High Rally

Mumbai, 14 November 2026: The Indian rupee closed the week at 94.24 per US dollar on Friday, 13 November 2026, down 0.3% week-on-week from its previous Friday close of 93.96, as a hawkish Federal Reserve repricing and a rebound in crude oil prices overwhelmed strong foreign portfolio inflows that had briefly lifted the currency to a six-month high earlier in the week.

The rupee’s weekly range spanned a high of 94.05 on Friday’s open to a low of 94.28, with the currency snapping a two-week rising streak that had been driven by a surge in overseas investment into Indian equities and debt.

The week’s defining tension was between a $8 billion-plus wave of foreign portfolio inflows into Indian stocks during November and a global dollar surge that pushed the US Dollar Index to 103.17, its highest since April 2025, as markets priced an 85-89% probability of a December Fed rate hike following hotter-than-expected October US inflation data.

Rupee Opens at 93.96, Peaks at Six-Month High Before Hawkish Fed Repricing Erases Gains

The rupee began the week on Monday, 9 November, at approximately 93.96 per dollar, building on the momentum from a strong FPI-driven rally that had commenced in early November. The currency touched its strongest level in over six months during the early part of the week, with foreign investors net buying more than $8 billion of Indian stocks in November and another $800 million flowing into local debt, according to data cited by market participants.

However, the bullish momentum began to reverse mid-week as the dollar strengthened on hawkish Fed expectations. The rupee’s weakest trading day was Thursday, 12 November, when it depreciated 41 paise to close at 94.12, marking its biggest daily decline in nearly three weeks, as the dollar index climbed above 103 and US Treasury yields surged.

The strongest day was effectively Monday and early Tuesday, when FPI inflows and low crude prices provided support before the macro headwinds intensified.

Dollar Index Hits 19-Month High of 103.17 as 5.135% Treasury Yield Crushes Emerging-Market Currencies

The US dollar’s rally to a 19-month high of 103.17 on the ICE US Dollar Index by Friday, 13 November, exerted sustained pressure on the rupee throughout the week. The dollar’s advance was driven by a hotter-than-expected October US Consumer Price Index print and a barrage of hawkish Federal Reserve commentary, with New York Fed President John Williams stating on Thursday, 12 November that more rate hikes are likely and Dallas Fed President Lorie Logan supporting at least two additional 25-basis-point increases.

The benchmark US 10-year Treasury yield spiked to 5.135%, its highest since 21 October, while the two-year yield climbed to 4.87%, increasing the appeal of dollar-denominated assets and triggering capital outflows from emerging markets including India. The dollar index’s surge was broad-based, with the euro falling to a 19-month low of 1.1046 against the dollar and the Japanese yen hitting 159.95, its weakest since September, further reinforcing the rupee’s depreciation pressure.

Brent’s 2.4% Weekly Decline to $95.41 Offers Partial Relief but Oil Rebound on Thursday Adds Strain

Crude oil prices presented a mixed picture for the rupee’s import bill and inflation outlook. Brent crude settled at $95.41 per barrel on Friday, 13 November, down 2.4% on the week, which provided some relief to India’s external balances given the country’s 85% import dependence.

However, the oil market’s mid-week rebound—Brent rallied 3.3% on Thursday, 12 November as Middle East tensions re-escalated and US-Iran talks stalled—exacerbated the rupee’s decline on that day, with the currency depreciating 41 paise in tandem with the oil price spike. The sequential relationship between oil and the rupee was evident: rising oil prices increase India’s import bill, widening the trade deficit and creating dollar demand from refiners and importers, which directly weighs on the currency.

India’s October merchandise trade deficit rose to a one-year high, adding to the strain on the rupee on Friday, 13 November, according to official data.

FPI Inflows of ₹53,739 Crore in November Provide Support but Are Absorbed by RBI’s $239 Billion Forward Book

Foreign portfolio investment flows were the primary supportive factor for the rupee during the week, with FPIs net investing ₹53,739 crore in Indian equities in the first nine days of November, the highest monthly inflow since September 2024, following two consecutive months of outflows totalling over ₹70,000 crore. The shift in FPI sentiment was attributed to global selling in artificial intelligence stocks, strong earnings from domestic companies, and attractive valuations of large-cap Indian equities.

However, the rupee’s appreciation potential from these inflows was structurally capped by the Reserve Bank of India’s (RBI) massive $239 billion net short forward dollar position as of September 2026, which requires the central bank to accumulate dollars as capital inflows improve, thereby limiting any sustained rupee strength.

The RBI’s forward book includes approximately $40 billion maturing within a year, $56 billion in one to three years, and $143 billion in three to five years, largely linked to the FCNR(B) swap scheme, and this structural dollar demand was a persistent counterweight to FPI-driven rupee gains.

RBI Forex Reserves Rise $2.49 Billion to $719.55 Billion as Central Bank Rebuilds Buffers Amid Intervention

The RBI’s foreign exchange reserves increased by $2.49 billion to $719.547 billion during the week ended 6 November 2026, according to data released on Friday, 13 November, reversing a $2.691 billion decline in the previous week. Foreign currency assets, the largest component, rose marginally by $232 million to $591.350 billion, while gold reserves surged by $2.205 billion to $104.796 billion, reflecting valuation gains from the metal’s price movements.

The reserve build was partly attributable to the RBI’s dollar-buying interventions during periods of rupee strength, consistent with the central bank’s stated approach of using appreciation windows to replenish reserves. The RBI’s forex curbs, announced in October 2026, had steadied the rupee and revived investor sentiment, but the central bank’s large forward position limits its ability to sell dollars in the spot market, as its capacity to sterilise such sales through additional buy-sell swaps is constrained.

Euro and Pound Weaken Against Rupee as Dollar Strength Dominates; Yen Range-Bound Ahead of Intervention Risk

The rupee’s performance against major crosses reflected the dollar’s broad strength. The euro traded in a range of 103.62 to 105.30 against the rupee on Friday, 13 November, with the single currency dropping as the dollar remained supported by growing expectations of further Federal Reserve tightening in December. Investor morale in the euro zone edged lower in November, underscoring expectations for economic stagnation, while the euro zone’s economic expansion slowed sharply in October, providing little support for the currency against the rupee.

The British pound traded between 123.99 and 125.76 against the rupee, weakening after US inflation data and hawkish Fed comments fuelled bets on a December rate hike, though the UK economy grew 0.7% in the third quarter and annual growth accelerated to 1.9%, offering some fundamental cushion.

The Japanese yen traded in a range of 58.38 to 60.54 against the rupee, with the yen dropping as the dollar strengthened following hawkish Fed commentary, while Japan’s top currency official cautioned against overlooking the summer’s joint intervention and the Bank of Japan’s board member pushed back against early tightening.

Rupee Depreciates 41 Paise on Thursday, Then 8 Paise on Friday as Trade Deficit and Equity Weakness Bite

The daily chronology of the rupee’s movement revealed a clear cause-and-effect chain from global macro events to domestic currency pricing. On Monday and Tuesday, 9-10 November, the rupee held near 93.96-94.05, supported by FPI inflows and a relatively stable dollar ahead of the US inflation data. On Wednesday, 11 November, the currency began to weaken as the dollar index climbed and US yields rose, with the rupee slipping towards 94.10 ahead of the CPI release.

On Thursday, 12 November, the rupee depreciated 41 paise to close at 94.12, its sharpest single-day fall in nearly three weeks, as the dollar index surged 0.29% to 103.17, its highest in 19 months, and Brent crude rallied 3.3% on Middle East supply disruptions.

On Friday, 13 November, the rupee opened at 94.07, touched an intraday high of 94.05 and a low of 94.28, before settling at 94.20 (provisional)—down 8 paise from the previous close—as a stronger dollar, weak domestic equities with the Sensex dropping 318.56 points to 81,592.45, and data showing India’s October merchandise trade deficit at a one-year high added to the strain.

Trade Deficit at One-Year High and 6.09% Retail Inflation Limit Rupee Recovery Despite FPI Support

India’s domestic macroeconomic data added to the rupee’s challenges during the week. The October merchandise trade deficit rose to a one-year high, compounding the currency’s difficulties as the data release coincided with the dollar’s peak strength on Friday.

Retail inflation surged to 6.09% in October, breaching the RBI’s 6% upper tolerance limit for the first time under the new series, and minutes of the RBI’s rate-setting committee meeting indicated that further rate hikes may be needed to contain inflation. Higher domestic inflation, while theoretically negative for the currency through purchasing power parity channels, was overshadowed in the short term by the dollar’s yield-driven strength and the trade deficit’s dollar-demand implications.

The combination of a widening trade deficit, elevated inflation, and a hawkish US Fed created a challenging backdrop for the rupee, even as FPI inflows provided a partial offset.

The rupee closed the week at 94.24 per dollar, down 0.3%, as the DXY’s rise to 103.17 and the 10-year Treasury yield’s spike to 5.135% outweighed ₹53,739 crore of November FPI inflows and a $2.49 billion reserve build to $719.55 billion. The RBI’s $239 billion forward dollar book and October’s one-year-high trade deficit remain structural constraints, while the rupee’s near-term path will hinge on the December Fed decision, crude oil’s trajectory around $95 per barrel, and the durability of foreign portfolio flows into Indian equities and debt.