MUMBAI, Sept 20 (Askume) – The Indian rupee rose for a fifth straight session on Friday, supported by gains in Asian peers and potential portfolio flows after the Federal Reserve began cutting interest rates earlier this week.
The rupee closed at 83.5625 against the US dollar, compared to 83.68 in the previous session.
The Indian currency hit a two-month high of 83.4850 in early trade, rising about 0.4% week-on-week, its strongest weekly gain this year.
The rupee got a boost from the Federal Reserve’s 50 basis point interest rate cut on Wednesday as well as investments in local stocks and bonds, traders said.
Foreign investors have bought over $7 billion in Indian debt and equities so far in September, the highest monthly inflows since December 2023.
India’s benchmark stock indexes BSE Sensex and Nifty 50 hit record highs on Friday, ending the day up around 1.5%.
A foreign bank trader said inflows were “quite robust”, but the rupee lost some gains after state-run banks stepped up dollar buying.
The U.S. dollar index rose about 0.1% to 100.8, and most Asian currencies gained between 0.1% and 0.6%. The closely watched yuan-rupee exchange rate rose to a 16-month high of 7.04.
Investors currently expect the Fed to cut interest rates by 70 basis points by 2024, which means a 50 basis point cut is likely to be one of the central bank’s two remaining policy decisions this year.
According to CME’s FedWatch tool, the probability of a 50 basis point rate cut in November is now 44%.
According to a report, FX strategists at Societe Generale expect the dollar to decline sharply in the coming quarters.
