Indian Rupee Closes Near Two-Month High

The rupee traded stronger against the dollar on Friday after the easing of U.S. bond yields.

The local currency strengthened 33 paise to close at 83 against the U.S. dollar on Friday. It strengthened to Rs 82.95, the most since Sept. 22, when the rupee was at Rs 82.83. It closed at 83.33 on Thursday, according to Bloomberg data.

According to Anindya Banerjee of Kotak Securities, the rupee has been underperforming for the past few months, and the recent acknowledgment by the Federal Reserve regarding the peak of interest rates has had a notable impact. Following the Fed's comments, there has been a significant shift in the USD-INR dynamics.

"DXY drops below the 102 mark, while 10Y UST yields drops below 4%. US retail sales came in better than expected. The ECB and the BoE kept rates on hold as expected," Kunal Sodhani, vice president of Shinhan Bank, said.

"Investors await the preliminary Eurozone HCOB PMI and US S&P Global PMI reports. For USDINR, 83.20 acts as a support, while 83.40 a resistance," Sodhani said.

There is a heightened expectation of increased capital inflows into emerging markets as the Federal Reserve leans towards a dovish stance and the anticipation of an early rate cut grows, coupled with the decline in the US yields, according to Amit Pabari, managing director at CR Forex.

"Among these, India is the most attractive option for investors, with the rising influx of funds. It appears to be only a matter of time before the stars align for the Indian rupee to appreciate," Pabari said.