Rupee scales seven-week peak on dollar weakness, eyes more gains

The rupee finished at 81.7650 per dollar compared with 81.9125 in the previous session.

The Indian rupee strengthened against the U.S. currency to a seven-week high on Wednesday, tracking Asian peers as the dollar index gave up gains and local equities remained resilient.

The rupee finished at 81.7650 per dollar compared with 81.9125 in the previous session. The currency rose up to 81.6950 during the day, its strongest level since March 6.

Both foreign banks and state-run banks offered dollars at around 81.90, but it was unclear whether it was related to a corporate inflow, two private bank traders said.

It’s possible that the Reserve Bank of India’s absence allowed a further move in the rupee, traders added.

”The rupee is expected to gain further as it has broken 81.80,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors, as the currency had found strong resistance near that level recently.

The range for Thursday is likely to be 81.50 to 82.00, Bhansali added.

Indian equities held firm despite a sell-off overnight on Wall Street and with most global indexes trading in the red, possibly helping the rupee on Wednesday.

The Nifty fifty index was up 0.3%, while stocks in London and Europe fell 0.3% and 0.7%, respectively.

Meanwhile, Asian currencies advanced as the dollar index reversed gains on the euro’s sharp rebound from Tuesday’s sell-off. The dollar was last down 0.4%.

The greenback had risen initially as a slump in regional U.S. banks’ shares reignited concerns over the health of the sector.

The odds of a rate hike next week by the U.S. Federal Reserve dipped slightly to 83%, but the base case remained that of a 25-bps hike.

Markets will now await U.S. March-quarter GDP data due on Thursday, followed by the personal consumption expenditure price index report on Friday for further cues on Fed’s policy.