MUMBAI: The Indian rupee slightly higher on Friday as dollar demand from state-run banks and importers eroded early gains on a fall in U.S. bond yields and positive sentiment following the presentation of India’s federal budget.

The rupee closed at 82.9175 against the dollar, compared to its previous close of 82.9650. For the week, the currency rose 0.2%.

While the rupee rose to an intraday high of 82.8325, the upside was capped by dollar purchases by state-run banks, likely on behalf of the Reserve Bank of India, four traders said.

The dollar index slipped to 102.91 and appeared on course for its sharpest weekly fall in over one month. Most Asian currencies rose, with the Korean won up over 0.7% and leading gains.

The Indian government, in its interim budget presentation on Thursday, announced a plan to curb fiscal deficit and gross borrowing targets for the financial year starting April 1, a move that is likely to aid debt inflows into India.

Indian rupee closes stronger, outperforms major Asian peers in January

The 10-year Treasury yield was last quoted at 3.89% after falling 10 basis points (bps) on Thursday amid safe haven demand due to renewed concerns about U.S. regional banks.

“Appreciation in the rupee was a bit due, which has come now,” Arnob Biswas, head of foreign exchange research at SMC Global Securities said.

But it will be key to see if the rupee is able to build on the gains as a potential recovery in the dollar may stall the momentum, Biswas added.

Focus shifts to the U.S. non-farm payroll data, due later in the day. Economists polled by Reuters expect payrolls rose by 180,000 in January, down from 216,000 in the previous month.