Rupee Hits Near 6-Month High; Best Weekly Gain Since Dec 2018

On Friday, the Indian rupee closed at 73.40 against the US dollar when compared to the previous day's close of 73.81. It was the third straight day of gains for the currency which was also the best performing currency in Asia for the second straight day.

On a weekly basis, the domestic currency made a gain of 2 percent, its best weekly gains since December 2018 and also the best performing currency in Asia for the week.

During the day the rupee rose to 73.28 per dollar, its strongest since 5 March.

In the weeks after the coronavirus pandemic, the Reserve Bank of India (RBI) has been aggressively building its forex reserves, which are up $60 billion at $535.35 billion so far, this financial year. This dollar buying spree had prevented a sharp appreciation in rupee's value, experts say, keeping the currency fluctuating in a tight range.

The intervention seems to have eased this week and triggered the rally. Official data on this week's forex balance will be out next week.

Further, reports citing traders say that foreign portfolio investors (FPIs) have bought $6.2 billion worth of shares so far in August. Positive sentiment among investors towards Indian stock markets often reflects on the Indian rupee. It is expected that the US Federal Reserve's recent monetary policy shift could further boost inflows into Indian markets.