MUMBAI, March 21 (Reuters) – The Indian rupee inched up on Friday, maintaining its weekly upward trend, with dollar inflows helping mitigate the impact of the decline in Asian peers.
The rupee was up 0.25% at 86.1475 to the U.S. dollar at 12:16 p.m. IST, extending its weekly advance to 0.72%.
The local currency is on course for its best weekly performance in two years on the back of inflows via foreign banks and amid traders unwinding speculative long-dollar positions.
Large foreign banks were “privy” to a major flow this week and have been on the offer on dollar/rupee “all through” this week, a currency trader at a bank said.
It was likely that the inflow is related to the possible dollar funds raised in the lead to the Reserve Bank of India’s next week FX swap, he said, adding that the rupee will face “stiff resistance” at the current level and “may not able to take it out”.
On Friday, bankers mentioned equity inflow related to the rebalancing of the FTSE’s All-World Index is likely to have boosted the rupee in the face of weak Asian cues. The rebalancing, which will take effect from Friday, is expected to garner inflows of about $1.5 billion.
The majority of Asian currencies declined on Friday, while the dollar index inched up tentatively. The primary focus for Asian currency traders remains on U.S. trade policy and the trajectory of U.S. economic growth.
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