Indian Rupee’s weekly gains erased as oil prices extend their rise

• The Indian Rupee extends its losses against the US Dollar as oil prices climb.
• Energy supplies remain at risk as tensions persist in the Middle East.
• October’s flash HSBC Global PMI readings point to continued strength in India.

The Indian Rupee remains under pressure against the US Dollar (USD) on Friday, extending Thursday’s decline and surrendering almost all the gains recorded earlier this week. With oil prices surging on Middle East tensions and weighing heavily on the domestic currency, USD/INR climbs towards 94.92.

Opening trade sees the MCX Crude Oil contract expiring on November 19 rise 0.65% to around Rs. 9,550. Prices remain close to the recent high of Rs. 9,661 reached earlier this week.

For economies such as India, where energy needs are met largely through imports, rising oil prices are unfavourable for the currency.

How has the Saudi drone attack affected Middle East tensions?

While describing the eventual impact on crude as contained, Commerzbank analysts say Middle East tensions “intensified after a drone attack on Saudi Arabia's Shaybah oil field killed two people and injured two others,” in their report. According to the analysts, “oil prices briefly jumped on reports suggesting a wider withdrawal of US diplomatic personnel from the Gulf,” but that advance faded as “Washington clarified that the order was limited to Saudi Arabia,” leading the market to trim its earlier gains.

Fears of a further escalation in military aggression in Iran have emerged following the withdrawal of US non-emergency personnel from the Gulf.

What underpins India’s robust private-sector output in October?

India’s overall business activity strengthened, according to October’s preliminary HSBC Global Purchasing Managers’ Index (PMI) readings. At 56.7, the Composite PMI exceeds September’s final reading of 55.9, with robust services activity driving the substantial improvement.

Pranjul Bhandari, Chief India Economist at HSBC, said: “Private-sector manufacturing activity continued to expand, with growth of output and new orders broadly unchanged at last month’s levels. However, the steady pace of new order growth masks the fastest increase in new export orders since June 2025. Manufacturers responded by increasing their stocks of purchases and finished goods. Input cost inflation eased, while the rise in selling prices softened to its weakest in almost four years,”

What will the US PMI readings show?

Due at 13:45 GMT, October’s preliminary US S&P Global PMI readings are the next release investors are watching. Expectations point to another expansion in both manufacturing and services activity, although at a moderate pace.

USD/INR Technical Analysis: Can the pair overcome near-term resistance?

A near-term bearish bias persists on the daily chart, with USD/INR trading at 94.92, below its 20-day exponential moving average (EMA) of 95.38.

Following a steep pullback from recent highs, the pair’s Relative Strength Index (14) stands at 37.94, only just above oversold territory. This indicates that downward momentum remains in place, although selling pressure may be easing.

Recovery attempts face immediate resistance at the 20-day EMA near 95.38. The pair needs to regain that level to alleviate the prevailing downside bias. On the downside, key support lies at 94.15, the June 25 low.

(The technical analysis of this story was written with the help of an AI tool. Know more.)