The Indian rupee’s recent
rally could face a test on Monday, with a tentative pause in
AI-related market jitters potentially slowing the
diversification flows into local assets.
The rupee is expected to open in the 93.92-93.98
range, traders said, after settling at 93.9050 to the dollar on
Friday.
The currency surged more than 1% last week, buoyed by a
sizeable pick-up in foreign inflows into Indian equities and a
decline in oil prices.
Foreign investors poured more than $4 billion into Indian
equities last week. South Korea and Taiwan, two markets that
have benefited significantly from the AI trade, slumped last
week, prompting foreign outflows.
A selloff in technology shares across the US and Asia after
the Democratic Party sweep in the US midterm elections on
Wednesday stoked concerns that it could impact sector growth.
That nervousness appeared to calm to an extent on Friday,
with the Nasdaq recovering and futures pointing to a further
advance. South Korean and Taiwanese markets rose on Monday.
“This non-AI and AI-linked trade is now very well
established. So you just have to see how that is playing out,
and that will determine how Indian equities and the rupee do,” a
currency trader at a bank said.
A nearly 20% plunge in Brent crude prices last week provided
an additional reason for foreign investors to favour Indian
assets.
For the rupee, capital flows and oil prices have been among
the biggest sources of pressure over the past several months. A
sustained turnaround in equity inflows, coupled with lower oil
prices, could provide the currency with much-needed support.
Meanwhile, most Asian currencies weakened on Monday after an
upside surprise in US payrolls strengthened expectations that
the Federal Reserve could raise interest rates in December.
Published on November 9, 2026
