The rupee closed at 85.3675 against the U.S. dollar, up from its close at 85.6775 in the previous session. The currency rose about 0.8% week-on-week, its best weekly gain since March 17.
Indian financial markets are shut on Friday for the Good Friday holiday.
Persistent weakness in the U.S. dollar has helped Asian currencies across the board, while inflows into Indian stocks have also picked up, helping lift the rupee.
Foreign investors have net bought over $1 billion of Indian stocks over the last two trading sessions, per provisional exchange data.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50, ended nearly 2% higher each on Thursday to log their best weekly rise in over four years. Financials led the charge on Thursday, with the financials services index rising 6% for the week. Bullish wagers on some emerging Asian currencies, including the rupee, have gathered steam over the last fortnight on the back of a persistently weaker dollar, per a Reuters poll.
The dollar nudged higher against major peers on Thursday but was unable to benefit from Federal Reserve Chair Powell’s remarks that the central bank would wait for clarity on the impact of tariffs before moving on policy rates again.
“The greenback is still responding to the narrative of relative US assets underperformance and growth concerns, which are arguably being compounded by a hawkish Fed,” ING Bank said in a note.
Meanwhile, dollar-rupee forward premiums, declined with the 1-year implied yield easing to a three-week low of 2.13% on the back of higher U.S. bond yields and an uptick in the rupee.
