Rupee's surprise Friday recovery faces test from weak peers, fragile risk

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The rupee is ⁠expected to open largely flat at 94.94-94.98 to the US dollar on Monday, per traders

By Reuters

Updated - November 02, 2026 at 08:53 AM. | MUMBAI

The Indian rupee’s surprise flow-driven recovery on Friday may prove harder to ​sustain. | Photo Credit: iStockphoto

The Indian rupee's surprise flow-driven recovery on Friday may prove harder to ​sustain, with weakness across Asian currencies and a deteriorating risk ‌mood weighing on sentiment, while a dip in ​oil prices may offer relief.

The rupee is ⁠expected to open largely flat at 94.94-94.98 to the US dollar on Monday, per traders.

The local currency spent most of ‌last week under pressure, falling to 95.28 on Friday before reversing course on heavy dollar ‌selling by a large foreign bank, according ‌to ⁠traders.

It was a "surprise" recovery for the rupee ⁠and "very much, against the trend", a currency trader at a private sector bank said.

Friday's recovery strengthens the view that the rupee ​will remain range-bound around the ‌95-per-dollar level for now, he said.

Neither he nor other traders Reuters spoke to could identify the specific flows behind the foreign bank's dollar-selling on Friday.

The rupee ‌will have a difficult time building on ​Friday's recovery, the trader added.

The rupee's Asian peers were mostly down to begin the ⁠week, bogged down by the selloff in US equities.

US technology shares slumped on Friday and bonds surged toward their ‌biggest monthly rise in nearly three years as investors sought safety due to worries that huge and rising AI spending may not deliver sufficient returns.

The AI-spending-led selloff presents a mixed picture for the rupee. While it hurts overall risk appetite, India is ‌seen a hedge against the technology-driven rout, potentially supporting foreign inflows. ​Overseas investors were net buyers of Indian equities on Friday.

Meanwhile, the Reserve Bank of India's ⁠net short dollar position in the forward market climbed to ⁠a all-time high of $240 billion in September, from $200 billion a month earlier.

The jump likely ‌reflects dollar inflows mobilised by banks under the RBI's special FCNR(B) deposit scheme and subsequently swapped with ​the central bank, analysts said.

Published on November 2, 2026

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