MUMBAI: The Indian rupee ended higher on Wednesday, buoyed by dollar sales from both local and foreign banks, which lifted the local unit to its strongest level in over two weeks.

The rupee ended at 83.0425 against the U.S. dollar, compared with its previous closing of 83.1050.

The local currency logged a 0.2% increase in January, marking its strongest monthly rise since June 2023. The rupee’s Asian peers were down between 0.8% and 3% in the month.

Dollar sales from large foreign banks aided the rupee in the latter half of Wednesday’s session, a foreign exchange trader at a private bank said.

Indian rupee flat ducking uptick in Asian peers, forward premiums inch up

However, its ascent above the 83.05 level attracted bids on the dollar-rupee pair, limiting gains, the trader added.

The dollar index was relatively unchanged at 103.49 but appeared on course to notch a monthly gain of slightly above 2%.

The rupee held its ground in January despite a resurgence in dollar strength, driven by the paring of aggressive rate cut bets in the U.S., which put pressure on its Asian counterparts.

While the rupee hit a peak of 82.77 earlier in the month, its highest level since September, equity-related outflows and a stronger greenback eroded some of those gains.

Overseas investors sold $2.8 billion worth of Indian equities in January, but the outflow was partially offset by $2 billion of debt-related inflows, per the latest share repository data.

Given the rupee’s prevailing range, “the bias favours the rupee bulls amid stronger domestic fundamentals,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.

Investor focus will now shift to the U.S. Federal Reserve’s policy decision due later in the day. While the Fed is not expected to make changes to the policy rate at this meeting, Chair Jerome Powell’s remarks may offer insights into when the rate easing cycle could begin.