MUMBAI: The Indian rupee rose to its highest level in four months on Friday, also marking its best week in a month, supported by dollar inflows towards both debt and equity investments and dollar sales by foreign banks on behalf of their clients.
The rupee ended at 82.9225 against the dollar, versus its previous close of 83.0275 and logged its eighth consecutive day of gains. It had risen to 82.87 in intraday trade, marking its highest level since Sept. 22.
For the week, the rupee rose 0.3% against the dollar, its best week since Dec. 15.
Foreign fund inflows and external commercial borrowing-related inflows helped the rupee rise above its crucial psychological level of 83 per dollar, traders said.
The Reserve Bank of India (RBI) still seems to be in “much control” of the rupee and intervention is evident on both sides, said Jateen Trivedi, vice president research analyst at LKP Securities.
The short-term trend in rupee appears positive after its move above 82.95, Trivedi said, pegging the currency in the 82.70-83.15 range in the near term.
Investors continue to look for clues from the US Federal Reserve for the outlook on interest rates.
Bets of aggressive Fed rate cuts this year remained intact despite the higher-than-expected US inflation data.
“A March rate cut is still over 60% priced in, and we still see short-term vulnerability for risk assets from a hawkish repricing,” ING Bank said in a note.
In December, the Fed officials forecast three rate cuts in 2024. However, investors have already factored in six cuts.
Fed Governor Christopher Waller will speak on Tuesday while US retail sales data will be released on Wednesday, providing additional clues on the US central bank’s monetary policy strategy.
Dollar-rupee forward premiums rose, with USD/INR one-year implied yield at 1.88%, up 11 basis points this week.
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