MUMBAI: The Indian rupee extended its winning streak on Monday as the dollar remained on the defensive, with investor confidence in US assets dented by President Donald Trump’s criticism of the Federal Reserve chief.
The rupee closed at 85.1275 against the US dollar, up 0.3% on the day. The local unit touched an over two-week high of 85.0450 against the dollar earlier in the day, before paring gains.
Asian currencies rallied as well, with the Thai baht and Malaysian ringgit leading gains with a near 1% rise each. The dollar index dropped 0.8% to an over 3-year low of 97.9.
Criticism of the Federal Reserve by President Donald Trump has further dented investor confidence in US assets, already weighed down by anxiety over the impact of US trade tariffs.
“The most important thing to watch out for markets may be how the disagreement between President Trump and Fed Chair Powell could play out further, and as such also further raising concerns around US exceptionalism,” MUFG Bank said in a note.
While a weaker dollar alongside offers from foreign banks helped the rupee on Monday, bids from importers and state-run banks hurdled the currency’s gains, traders said.
Dollar bids from state-run banks also prompted traders to speculate that the Reserve Bank of India may be absorbing dollar inflows to replenish its foreign exchange reserves.
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