Rupee posts best day in over five months boosted by inflows, softer dollar

While dollar sales were dominated by foreign banks early in the session, it was pretty broad based in the latter half, a trader at a private bank said

The Indian rupee logged its strongest one-day gain since June on Monday, aided by dollar inflows related to the rebalancing of MSCI's global equity indexes, alongside softness in the dollar and lower US bond yields.

The rupee closed at 84.2875 against the US dollar, up 0.2% from its previous close, its biggest single-day gain since June 3.

The currency rose to 84.2550 during the session, its highest since Nov 7.

The dollar index =USD and Treasury yields kicked off Asia trading on the backfoot as markets reacted to U.S. President-elect Donald Trump's nomination of investor Scott Bessent for the post of Treasury secretary.

Bessent, who has spent his career in finance, is seen as a comforting choice for markets and expected to keep a steady hand on government finances.

The dollar index was last quoted at 106.8, down 0.5% from its closing level on Friday. U.S. Treasury yields were lower with the 10-year yield down 7 basis points at 4.34%.

"It looks like geopolitics and the diverging US-eurozone macro story will keep the dollar bid into year-end after all," ING Bank said in a note, pegging the dollar index in a 106.5-107.5 range for the week.

The rupee was also helped by dollar inflows likely related to the rebalancing of MSCI's global equity indexes, which will be effective after markets close on Monday.

While dollar sales were dominated by foreign banks early in the session, it was pretty broad based in the latter half, a trader at a private bank said. Benchmark Indian equity indexes BSE Sensex  and Nifty 50 .NSEI ended higher by more than 1% each.

Investors now await the minutes of the Federal Reserve's November meeting and core U.S. PCE inflation figures, both due on Wednesday.