Mumbai (Reuters) – The Indian rupee rose to a two-week high on Thursday as traders holding long positions on the dollar exited after domestic economic data surprised on the upside.
The rupee was at 82.4425 against the U.S. dollar by 10:22 a.m. IST, compared to 82.7225 on Wednesday. It touched its highest since May 18 at 82.3675.
There are enough catalysts like India’s gross domestic product (GDP) data and lower possibility of a Federal Reserve rate hike in June for the rupee to appreciate, said Anindya Banerjee, head of research – fx and interest rates at Kotak Securities.
The string of positives for the rupee has prompted USD/INR long positions to lose patience, a sales person at a private bank said.
India’s economic growth accelerated to 6.1% in the March quarter, much higher than what economists had expected, showing that the country remains one of the fastest growing emerging economies.
The rupee and other Asian currencies were helped by comments by two Fed policymakers that indicated that they were not in favour of raising rates in June.
The probability of a rate hike dropped to about 38% from 67% seen earlier this week.
U.S. treasury yields dropped, while the dollar index slipped from over a two-month high.
Tracking the fall in U.S. treasury yields, the implied yield on the one-year rupee forward premium rose to 1.78%