The Indian rupee ended little changed on Friday after rising to its highest level in a week as dollar demand from importers and a mild uptick in the dollar index eroded gains driven by inflows, traders said.
The rupee closed at 82.90 after ending at 82.9125 on Thursday. The local unit notched a weekly gain of 0.04%, its third one on the trot.
The dollar index touched a high of to 104.18 and was on course to notch a weekly gain of 0.1%. Most Asian currencies were rangebound and ended the week mixed.
Inflows aided the rupee but they were not enough to push it above the resistance at 82.80, a foreign exchange trader at a private bank said. But market sentiment appears broadly in favour of further appreciation, the trader added.
The rupee also benefited from optimism sparked by data showing India’s GDP growth in the October-December quarter far exceeded expectations, with the economy expanding by 8.4%, against the 6.6% anticipated by economists polled by Reuters.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50, ended the day higher by 1.7% and 1.6%, respectively, after touching fresh record highs earlier in the session.
But a firmer dollar amid strength in U.S. economic data and delayed expectations of Federal Reserve rate cuts may exert some pressure on the rupee in the near term, analysts said.
Despite some of the pressure, the rupee’s losses are likely to be contained near 83-83.05, Arnob Biswas, head of foreign exchange research at SMC Global Securities said.
Investors now await remarks from multiple Fed officials slated to speak later in the day, which may offer cues on policymakers’ thinking about the potential timing of rate cuts.
