India rupee's recovery may find fresh legs from equity flows, dollar weakness

Business Recorder reported that the Indian rupee was set to begin Wednesday near 94.70, after ending Tuesday at 94.74. Its recent rebound could receive support from renewed overseas buying of Indian shares and a softer US dollar, with the dollar index down 0.3%.

Foreign investors bought more than $700 million of Indian equities on Tuesday, bringing their net purchases across three sessions to about $1.5 billion. Indian stocks have gained 5% over four sessions as investors shifted some funds away from AI-related shares; expectations of a possible reduction or removal of the capital-gains tax for foreign investors also encouraged demand.

US midterm election positioning has weighed on the dollar, although analysts at ING said the vote was unlikely to alter foreign-exchange markets structurally. They said the dollar could face near-term pressure if Democrats take both congressional chambers, while Asian currencies reacted little and regional shares extended their declines.