MUMBAI: The Indian rupee opened at a five-week high on Wednesday, as the dollar wobbled while US mid-term election results trickled in, but the local currency gave up some gains as oil companies stepped in to buy the greenback.

The rupee was trading up 0.46% at 81.5425 per dollar by 0510 GMT.

It opened at 81.39 per dollar, its highest level since Oct. 4.

Private bank traders cited oil marketing companies buying dollars around 81.50 and expected 81.65-levels would hold for the day.

The USD/INR’s drop is attractive for oil firms and other importers and one can expect the “buy-on-dip strategy to continue”, said a foreign exchange dealer at a private bank.

USD/INR forward premiums rose on paying by importers in near-month deliveries, with hedging likely prompted by lower spot prices.

The three-month USD/INR implied yield firmed to 2.60% from 2.53% in the previous session.

The dollar index was at 109.65 after falling to its lowest since mid-September overnight as results of US midterm elections rolled in.

Early results showed several Republican senators had easily won re-election but control of the chamber remained up for grabs, with several contests too close to call.

Indian rupee begins week on positive note, US inflation data next trigger

Republicans were still favoured to wrest control of the House of Representatives from President Joe Biden’s Democrats, potentially causing a Congressional gridlock that analysts saw as negative for the dollar.

Asian currencies jumped, except for the Chinese yuan , while regional stocks also gained.

Meanwhile, Goldman Sachs analysts now expect the Reserve Bank of India to raise interest rates by bigger margins in December and February, meaning they would reach the terminal rate of 6.75% by February, instead of April.

The revised forecast is as the brokerage expects India’s inflation to stay above the RBI’s target band until the second quarter of 2023 due to higher food and services inflation.