By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee closed stronger on Wednesday, aided by an uptick in most of its Asian peers ahead of a closely watched testimony from Federal Reserve Chair Jerome Powell before U.S. lawmakers.
The rupee ended at 82.8225 against the U.S. dollar, higher by 0.09% from its previous close at 82.8950.
The dollar index slipped nearly 0.2% to 103.6, while Asian currencies climbed, with the Indonesian rupiah up 0.4% and leading gains.
The local currency gained towards the end of the session, aided by dollar sales from at least two large foreign banks, a foreign exchange trader at a private bank said.
The absence of dollar bids from state-run banks, typically seen towards the close of the session, were also missing which helped the rupee gain, the trader added.
Benchmark Indian equity indices rose to fresh record highs with the Nifty 50 and BSE Sensex ending the session higher by about 0.5% each.
While there have been strong debt inflows over the last couple of weeks, the rupee’s gains have been capped by strong dollar demand from importers and likely intervention from the Reserve Bank of India, Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services, said.
Overseas investors have poured $5 billion into Indian bonds so far this year, compared with the $8 billion of net inflows into debt seen over 2023.
Investors now await the release of U.S. job openings data and remarks from the Fed Chair, slated to speak both on Wednesday and Thursday, for further cues on how the trajectory of benchmark policy rates in the United States.
The odds of a May rate cut are around 22%, while those for June have risen to nearly 69%, up from about 63% a week earlier, according to CME’s FedWatch tool.
(Reporting by Jaspreet Kalra; Editing by Sohini Goswami)
