The Indian rupee closed at its strongest level in more than five months on Thursday, aided by an uptick in its Asian peers and on the back of dollar inflows into the domestic share and bond markets.
The rupee settled at 82.84 to the U.S. dollar, its highest closing level since Sept. 4 after having logged its biggest single-session gain in nearly two months.
Throughout the day, the rupee traded in a range of 82.84 and 82.95, after closing at 82.97 in the previous session.
The brief outages on various London Stock Exchange Group (LSEG) news and currency trading platforms globally did not have a material impact on the rupee, traders said.
“Overall, there is a higher potential for the rupee to rise above 82.80, given the robust foreign inflows. But the RBI’s (central bank) firm grip on the currency could limit any further upside,” said Amit Pabari, managing director at FX advisory firm CR Forex.
“The stability of the rupee is also aiding confidence among investors for a favourable carry set up.”
Asian currencies were mostly higher, while the dollar index extended its decline from Wednesday to hit a three-week low.
The dollar struggled despite a further decline in the odds of a Federal Reserve rate cut in March or May after the minutes of the central bank’s last policy meeting indicated it needs to be sure that inflationary risks receded before cutting rates.
Meanwhile, the dollar/rupee forward premiums dipped, with the one-year implied yield falling to the lowest in two months.
Traders said the RBI’s upcoming $5 billion swap maturity was probably leading to a receiving interest, pushing forward premiums lower. The central bank’s sell dollars/buy rupees swap matures on March 11.
