MUMBAI: The Indian rupee strengthened on Friday to a one-month peak against the US currency, tracking a rise in its Asian peers, and further driven by potential dollar inflows.
The rupee firmed 0.32% to 82.33 per dollar by 10:20 a.m. IST.
It rose up to 82.2525, its strongest level since Feb. 3, and if the day’s gains hold, this would be the rupee’s best week in a month.
The currency’s move is helped by foreign equity inflows, said a private bank trader, who noted that this breakout of the 82.50-82.90 trading range could see the rupee head towards the 82.15-level.
“However, the theme of aggressive Federal Reserve policy in the near term could limit gains in the local unit,” said Amit Pabari, managing director at CR Forex Advisors.
After six days of being net sellers, foreign institutional investors bought Indian stocks worth 127.7 billion rupees ($1.55 billion) on March 2, according to provisional data from the exchanges.
The inflow was likely related to investment by foreign investors into Adani group companies’ stocks. US boutique investment firm GQG Partners bought shares worth $1.87 billion in four Adani entities, a regulatory filing on Thursday showed.
Surging US yields, weak risk to dampen Indian rupee’s recovery
Indian shares jumped 1%, as the mood in Asia was buoyant.
Most equity markets advanced, while currencies such as the Chinese yuan and the South Korean won firmed 0.2% and 0.4%, respectively.
The dollar index dipped slightly after sharp overnight gains, while US yields softened as the Fed peak rate expectations hovered near 5.45%.
The number of Americans filing new claims for unemployment benefits fell again last week, pointing to sustained labour market strength and adding to financial market fears that the Federal Reserve could keep hiking interest rates for longer.
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