Indian Rupee Records Longest Winning Streak in a Year Against USD

The Indian rupee has achieved a significant milestone by ending higher against the U.S. dollar for five consecutive sessions, marking its longest winning run in a year. This rally was driven by aggressive dollar selling from exporters and commercial banks, effectively countering global headwinds.

Aggressive Dollar Selling Drives the Rally

Despite a challenging start to the trading day, the rupee showed remarkable resilience. After opening weaker following hawkish policy projections from the U.S. Federal Reserve, the currency touched a day's low of 94.7025 against the greenback. However, it staged a strong recovery, climbing to a six-week high of 94.19 before eventually closing at 94.3325, representing a 0.2% gain from its previous close.

Over the last five sessions, the rupee has gained approximately 1.5%. This turnaround is largely attributed to "fixing-related selling" in the USD/INR pair. Traders noted that there was significant selling activity across both foreign and private banks, supported by strong FCNR-B (Foreign Currency Non-Resident Bank) flows. Exporters emerged as the dominant force in the market, aggressively selling dollars and putting downward pressure on the pair as they unwound residual long-dollar positions.

Countering the Federal Reserve's Hawkish Stance

The rupee's performance is particularly noteworthy given the recent shift in U.S. monetary policy sentiment. The Federal Reserve's updated projections showed a hardening of rate expectations, with policymakers suggesting at least one rate hike in 2026. Furthermore, markets have already priced in a 25-basis-point hike before the end of December.

Usually, such a hawkish stance by the Fed strengthens the U.S. Dollar Index and pressures emerging market currencies like the rupee. However, the domestic supply of dollars—driven by exporters and bank flows—was sufficient to absorb these pressures. The Reserve Bank of India (RBI) also remained active throughout the day, intervening in small pockets to manage dollar inflows and maintain stability.

Falling Crude Oil Prices Provide Additional Support

A significant tailwind for the Indian currency came from the energy markets. Brent crude futures saw a sharp decline of 2.5% in Asian trade, following an interim peace agreement signed between the U.S. and Iran.

Pour une économie dépendante des importations comme l'Inde, la baisse des prix du pétrole brut est un indicateur positif majeur. Des prix du pétrole plus bas aident à réduire la facture globale des importations de l'Inde et à diminuer la demande immédiate de dollars américains par les compagnies pétrolières nationales. Cette réduction de la demande de dollars a davantage atténué la pression sur la roupie, complétant l'activité de vente domestique pour alimenter la série de hausses actuelle.

Points clés

• Série de hausses prolongée : La roupie a progressé pendant cinq séances consécutives, sa plus longue série en un an, gagnant 1,5 % sur cette période.
• Facteurs d'offre domestique : Le rallye a été principalement alimenté par des ventes agressives de dollars par les exportateurs et par d'importants flux entrants de FCNR-B via les banques privées et étrangères.
• Vents favorables macroéconomiques : Une baisse des prix du pétrole Brent due aux développements géopolitiques a apporté un soutien crucial en atténuant potentiellement le déficit commercial de l'Inde et la demande de dollars.