According to the global financial services major, it has been among the better performing currencies in the emerging markets and has appreciated 6 per cent so far this year, but there are few triggers left for a sharp rally of the rupee from its current level.
The rupee resumed marginally lower at 64.14 per dollar against Thursday's closing level of 64.12 per dollar at the interbank foreign exchange market. The domestic currency hovered in a range of 64.14 and 64.0850 before quoting at 64.09 per dollar at 1025 hrs.
The rupee resumed sharply lower by 17 paise at 64.17 per dollar against Wednesday's closing level of 64.00 per dollar at the interbank foreign exchange market. The domestic currency hovered in a range of 64.17 and 64.07 before quoting at 64.08 per dollar at 1100 hrs.
The US dollar ended higher against the rupee at 63.93/94 per dollar and the pound sterling also turned higher at Rs 84.48/50 at the close.
A rally in local equities supported the rupee sentiment, a dealer said. The rupee resumed higher at 63.93 per dollar at the interbank foreign exchange (Forex) against last closing level of Rs 64.04 per dollar. The domestic unit hovered between 63.93 and 63.87 during morning deals. It was quoted at 63.90 at 1030 hrs.
Authorities worried about the possibility of international rackets getting access to the same source from where India imports materials for currency printing .
The domestic currency has firmed up by close to 5.5 per cent against the dollar since February on the back of a significant portfolio capital inflows of about USD 27.5 billion. Moreover, the Indian currency has appreciated by 3.7 per cent against the Chinese Renminbi since February, resulting in surge in cheaper imports from China.
The rupee has risen more than six per cent this year against the dollar. This is in contrast to six consecutive years of depreciation.
It took nearly two years for the Indian rupee to finally break the psychological 64 level. The rupee has been one of the strongest currencies in the world in 2017.
Having strengthened more than 3 percent since the start of 2017, the yuan is forecast to weaken to 6.90 per dollar in a year, according to the poll of over 60 foreign exchange analysts taken July 27-August 2.
The rupee rose to as much as 63.7575 per dollar, its strongest level since Aug. 10, 2015, from its close of 64.0750 on Tuesday. Traders estimated foreign banks had sold around $1 billion worth of dollars.
The stock market zooming to record highs in early trade cleared the way for the rupee's upmove, traders said. But the dollar made headway overseas after US jobs data, which came as a dampener for the rupee.
Despite a rate hike from the Federal Reserve, the US dollar index declined yesterday on account of weaker-than- expected retail sales and CPI data, said the report of HDFC Bank's Treasury Research Team.
Earlier, the rupee resumed lower by 6 paise to 64.49 as against yesterday's closing level of 64.43 per dollar at the Interbank Foreign Exchange (Forex) Market.
The rupee resumed higher by 9 paise to 64.35 per dollar as against last Friday's closing level of 64.44 per dollar at the Interbank Foreign Exchange (Forex) Market.
The Chinese yuan shot up as trading resumed following an extended weekend, rising about 0.4 percent against the dollar. The currency posted its biggest intraday percentage gain in over four months.
Surge in the rupee in the past few sessions was on account of FII inflows into equities and weak dollar in the overseas market.
The rupee resumed lower at 64.91 per dollar as against the yesterday's closing level of 64.89 per dollar at the Interbank Foreign Exchange (Forex) Market. Later, it recovered on dollar selling by banks to 64.80 before falling again to 64.94 at 1100 hrs.
Since the start of the calendar year the rupee has gained nearly 6 percent against the dollar and 2 percent against emerging market currencies, largely on account of glad tidings on the economy and political fronts. Post demonetisation, it has gained from a strong showing by the BJP in the U.P. election and from parliament clearing hurdles for a GST launch. Crude oil prices continue to remain range-bound, with the OPEC nations curtailing oil production.
"Overall the rupee has been strengthening this year due to higher foreign fund inflows due to reforms like GST. But now exporters are also selling dollars on one hand and they are started covering (buying dollars) their position on the other," FirstRand Bank Treasury Head Harihar Krishnamurthy told PTI.
While markets do not expect the Federal Reserve to raise interest rates at its policy meeting later on Wednesday, the central bank is tipped to lift rates twice more this year, with one likely as early as next month, which would be supportive of the dollar.
The rupee resumed higher at 64.12 a dollar as against the last weekend's level of 64.24 at the Interbank Foreign Exchange market and moved in a range of 63.9975 and 64.19 before quoting at 64.18 at 1100 hours.
India needs to have supportive exchange rate policies and the rupee shouldn't become too strong, Chief Economic Adviser Arvind Subramanian said today.
The 30-share Sensex was down was down 103.61 points at 30029.74, while the Nifty was down 9.70 points at 9342.15.
The rupee resumed higher at 64.42 against the dollar as against yesterday's closing level of 64.44 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed up further to a 3-week high at 64.27, before quoting at 64.29 per dollar at 1100hrs, showing a gain of 15 paise.