The Indian rupee ended higher on Friday after the central bank raised interest rates by 25 basis points and spurred on by stock market gains, which dealers said would make the Indian unit more attractive.
The partially convertible rupee ended 0.06 percent higher at 45.96/97, as against the previous close of 45.97/99. The rupee, which hit a three-year low of 46.57 last week, has lost more than 2 percent since May 11, when shares touched an all-time peak.
"The rupee outlook is broadly neutral. The risks are lower as the pace of inflows from foreign institutional investments may cool down substantially," said Sanjeet Singh, fixed income analyst with ICICI Securities. "Along with the current account deficit expanding, the rupee may become vulnerable."
The Reserve Bank of India, surprising the markets, raised the key reverse repo rate by 25 basis points to 5.75 percent on Thursday.
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