Indian Rupee set to Extend Rally on Asian Gains

A general increase in Asian peers and expected portfolio inflows could help the Indian rupee's rise to multi-month highs continue on Friday.

The rupee will open between 84.42 and 84.44 to the dollar, a slight increase from its closing of 84.4875 on Wednesday, according to the one-month non-deliverable forward. On Thursday, the financial markets in India were closed.

After breaking over a significant resistance level, the rupee saw an almost 1 percent rally on Wednesday, its biggest day in over two years. Stop-loss triggers on long dollar bets, inflows, and increasing exporter hedging all contributed to the surge.

The 200-day moving average is located in the 84.90–85.00 zone, which the rupee has been testing on a regular basis, according to a trader at a bank in Mumbai.

"A series of dollar offers followed when it made a clear breakthrough. It will take a lot for the rupee's momentum to change in the near future now that it is over," he stated.

Bankers said the recent spike in equity inflows was expected to continue, adding that the rupee's rally was all the more astonishing given the tensions between India and Pakistan after the deadly militant strike in Kashmir.

The offshore Chinese yuan increased past 7.2550 per dollar on Friday, along with other Asian currencies. On Thursday, however, the dollar index increased for the third day in a row, surpassing the critical 100 mark.