MUMBAI: The Indian rupee hit more than a five-week high on Tuesday, as under-hedged exporters dashed to cover their positions, while falling US Treasury yields kept the dollar in check amid recession fears.

The partially convertible rupee ended the session at 78.7125 per dollar after touching 78.49, its highest since June 28, and has amassed gains of about 1.4% over the past four trading sessions. On Monday, the unit had closed at 79.02.

“Exporters were hoping to liquidate their holdings when the rupee touches 80-81 but suddenly it appreciated a lot and ‘fear of missing out’ came into play which made them offload at this level,” said a trader at a state-backed bank.

Signs of a possible recession in the world’s biggest economy has been dragging on the dollar as it erased chances of large rate hikes by the Fed. It has also pulled US Treasury yields lower, which in turn hurt the greenback.

US Speaker Nancy Pelosi’s visit to Taiwan added to market jitters on the day, sending US yields to a four-month low.

That sentiment kept risk assets under pressure across Asia, but the Indian rupee was an outlier as it rose the most among its emerging market peers on a deluge of inflows.

With the US Fed sounding dovish last week, equities have reversed course and there’s optimism that they will contribute positively in August, the trader said.

There are considerable inflows into the debt market, while the recent 5G telecom auction has also brought in billions of rupees, the person added.