By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee logged its best day in more than two weeks on Monday, aided by likely portfolio inflows into local equities while a key technical resistance near its year-to-date peak limited the currency’s rally.
The rupee touched a peak of 84.98 against the U.S. dollar before ending the session at 85.03, up nearly 0.5% on the day.
Benchmark Indian equity indexes, the BSE Sensex and Nifty 50, rose about 1.2% each on the day, outperforming their regional peers alongside the rupee.
A sizeable portion of the benchmarks’ gains came from oil-to-telecom conglomerate Reliance Industries, which jumped more than 5% and hit a six-month high after beating analysts’ estimates for quarterly earnings.
Foreign investors have stepped up purchases of Indian stocks over the last week, a reversal from the selling pressure witnessed earlier in the month.
This, in turn, has been a tailwind for the local currency, which is up 0.6% on the month so far.
“Liquidation of longs (on USD/INR) and some retracement of the India-Pakistan tension spurred a rise”, also helped the rupee on the day, a salesperson at a large foreign bank said.
However, in the near-term, the rupee keeps running into resistance near the 200-day moving average around 84.97-84.98, a trader at a bank said, adding that state-run banks were also spotted bidding for dollars near those levels.
The dollar index, meanwhile, was down 0.1% at 99.6.
While U.S. tariff-related developments have weighed heavily on the dollar this month, analysts expect U.S. economic data to be among the key drivers for the greenback this week as markets watch out for signs of weakness in the U.S. economy.
“Any big downside surprise can trigger another leg of dollar selling,” ING Bank said in a note.
U.S. personal consumption expenditure (PCE) inflation data is due on Wednesday, followed by the non-farm payrolls report on Friday.
(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
