The rupee rose sharply on Friday and extended its weekly winning streak for the second week in a row as the dollar retreated from its highest levels in two decades as investor sentiment improved even as the strong path of interest rate hikes by major central banks clouded the global rise in risky assets.
PTI reported that the Indian currency rose by 13 baisas to temporarily close at 79.56 against the US dollar.
Bloomberg showed that the rupee last traded at 79.5838 to the dollar, after a stronger opening at 79.6288 compared to Thursday’s close of 79.7175.
The Indian currency hit a one-month high of 79.57 earlier in the day and closed the week with a gain of about 0.2 percent, its best performance in seven weeks.
Weekly strength also marks the second consecutive week of gains for the local currency.
The rupee appreciated due to positive local stocks and weak US dollar. The dollar fell more than 1 percent on a sharp rebound amid an unprecedented rate hike by the European Central Bank (ECB) to 1.25 percent, Anuj Chaudhry, Sharekhan research analyst at BNP Paribas, told PTI.
“Global inflationary pressures may put pressure on riskier assets. However, dollar weakness and positive signals from global markets may support the rupee at lower levels,” Chaudhry said. “The spot rate of the US dollar against the Indian rupee is expected to trade in the range of Rs 79 to Rs 80.30 in the next two sessions,” he added.
But analysts in a Reuters report said, that India risks losing its export advantage as the rupee stabilizes amid the rapid weakness of other Asian currencies.
The broad rally in risky assets pushed the dollar lower, with the greenback heading for its first weekly decline in four weeks as investors await US inflation data early next week.
In fact, the dollar index, which compares the performance of the US currency against six major peers, fell 1 percent on Friday and traded at 108,400. The currency lost ground overall and was poised for a weekly decline of 1.1 percent, the first drop in a month or so.
That’s even as Federal Reserve Chairman Jerome Powell asserted a strict policy path.
The strongest suggestion yet from Japanese officials regarding possible direct market intervention in response to a weak yen sent the currency on its way to its best day of the month.
The euro was among the big gainers, jumping 1.1 percent to a three-week high of $1.01105, a day after the European Central Bank raised its key rate by a record 75 basis points and hinted more to come.
At the dollar’s expense, even the crammed cryptocurrency has surged, with bitcoin back above $20,000 and up 7 percent.
Indian local stocks rose on Friday, with Sensex closing below the 60,000 level after hitting that level earlier in the session.