The rupee closed 0.2% higher at 95.1625, its highest level since August 5, from the previous session’s close of 95.3775.
For the month, the currency gained 0.2%, after declining 0.8% in July.
The currency reversed its move around midday after the Reserve Bank of India’s intervention, with such sustained presence insulating it from adverse external developments.
The dollar also came under renewed selling pressure on offer from foreign banks linked to the MSCI index-related inflows, traders said, which supported the rupee.
Analysts expect net inflows of around $1 billion from the MSCI rebalancing effective from September 1.
“Technically, USD/INR is showing signs of exhaustion with lower highs and lower lows technical formation. This suggests sustainable downside journey for pair to test initial strong support around 93.50 mark in a couple of months,” said Dhaval Shah, founder and managing director, De-Risk Forex Consultancy.The rupee had opened 0.1% down after oil prices surged following the latest escalation involving the U.S. and Iran, and on rising expectations of a September rate hike in the U.S. after hawkish comments from Federal Reserve Chair Kevin Warsh.
“Fed chair’s speech has raised the expectation of market about 25 bps hike in September, but this hike, if at all it happens, can be a protective one considering ongoing weaker jobs and manufacturing data and rangebound oil prices,” Shah said.
