The Indian rupee strengthened past 94.00 per dollar for the first time since April, according to analysts at Societe Generale led by Kenneth Broux, who pointed to a decline in Brent crude below $90 per barrel and stronger portfolio inflows into FAR-eligible bonds and equities as the drivers.
Oil and inflows cited
“The decline in Brent below $90/b is bolstering the terms of trade of India but has also been accompanied by a sharp improvement in portfolio flows,” the analysts said.
“Together, those factors have helped deflate USD/INR below 94.00 for the first time since April,” they added. FAR-eligible bonds refer to securities open to foreign investors under India’s Fully Accessible Route.
Mexican peso also firmer
Societe Generale also noted that USD/MXN extended below 18.50. The bank said that move has more to do with a rebound in stocks than with a slump in energy prices.
Brent’s slide below $90 a barrel has coincided with the rupee’s advance. Portfolio flows into Indian assets have also picked up.
Related: Rupiah slips past 18,100 per dollar on fund outflows · Rupiah weakens past 18,000 per dollar as Treasury yields rise
Source: Societe Generale
