USD/INR dropped below 94.00 for the first time since April as lower oil prices and $5.2bn in net foreign equity inflows bolster the Indian Rupee.
USD/INR has dropped below 94.00 to its lowest level since April as MUFG highlights two supportive forces for the Rupee: lower oil prices easing India's import bill, and net foreign equity inflows of $5.2bn into Indian equities last week. Continued inflows and cheap crude argue for further Rupee strength, i.e. a lower pair.
The Indian Rupee strengthened against the US Dollar, with USD/INR falling below 94.00 to reach its lowest level since April. MUFG analyst Lloyd Chan attributes this momentum to lower crude oil prices, which have improved India's terms of trade, alongside a surge in foreign capital. Foreign investors purchased a net $5.2bn in Indian equities last week, contrasting with outflows seen in South Korea and Taiwan.
Lower oil prices reduce India's import costs, and foreign investors bought a net $5.2bn of Indian equities last week, both of which support the currency and pushed USD/INR below 94.00.
MUFG sees the combination of cheap oil and ongoing equity inflows as supportive for the Rupee, though it depends on foreign flows persisting and oil staying low.