MUMBAI: The Indian rupee is expected to open higher against the US currency, after the Bank of England’s decision to buy long-dated British bonds prompted a pullback in Treasury yields and the dollar index.

The rupee is seen at around 81.60-81.65 per dollar in early trades, up from a record closing low of 81.94 on Wednesday.

The local unit has dropped nearly 3% over the past six sessions despite likely intervention by the Reserve Bank of India. The dollar index tumbled on Wednesday, Treasury yields fell sharply and US equities recovered after the BoE took measures to stop the rout in the U.K.

bond market. The “obvious question” for the rupee is how sustainable “the big moves” seen across developed markets are likely to be, said a trader at a Mumbai-based bank.

Indian rupee at record low, with central bank likely helping cap slide

“The rupee will open higher but based on what has happened over the last week or so, the benefit of doubt will be more in favour of this just being a relief rally.”

The BoE said it would buy as much government debt as needed after new UK Prime Minister Liz Truss’s tax cutting plans triggered financial chaos.

The dollar index fell the most in more than two years on Wednesday, as risk aversion eased. The U.K. 10-year yield plunged 50 basis points, helping halt the selloff in the Treasury market.

The 10-year Treasury yield dropped to near 3.70%.

Risk appetite recovered with the S&P 500 Index climbing 2% overnight.

Asian shares were trading higher by as much as 1.2%, while currencies were mixed.

Investors now await the RBI’s monetary policy committee’s decision on Friday, with growing expectations of a 50 basis point hike due to the pressure on the rupee from large interest rate hikes in the United States.