Indian Rupee Hits Two-Week High On Strong GDP Data And Reduced Fed Rate Hike Expectations

The Indian rupee surged to a two-week high on Thursday as solid domestic GDP statistics led traders to close long dollar holdings.

According to a report by Reuters, the Indian rupee concluded trading at 82.405 against the US dollar, registering a decline from Wednesday's rate of 82.7225. However, during the session, it reached a peak of 82.3675, which marked its highest level since May 18.

The rupee rose 0.38% on Thursday, its highest level since April 5. According to Dilip Parmar, a research analyst at HDFC Securities, consistent flows into equities, combined with strong economic data, are supporting the rupee.

The USD/INR, on the other hand, is projected to find firm support near 82.30, according to Parmar. India's economic growth advanced to 6.1% in the March quarter, exceeding economists' expectations, cementing the country's status as one of the fastest growing emerging economies.

In May, India's factory output rose at the fastest rate since October 2020, owing to robust demand and output, according to a private poll. A salesperson at a private bank remarked that the rupee's series of gains has caused USD/INR long positions to lose patience.

The rupee received a boost from comments made by two US Federal Reserve policymakers, expressing their opposition to raising interest rates in June. This contributed to the strengthening of the Indian currency.

The probability of a Fed rate hike has reduced to around 38% from 67% earlier this week. The dollar index held firm near a two-month high set on Wednesday.