The rupee closed at 83.7925 against the U.S. dollar, up nearly 0.1% from its close of 83.87 in the previous session.
The currency rose to an intraday peak of 83.7650, its highest level since Aug. 5.
Dollar sales from at least two large U.S.-based banks, likely on behalf of custodial clients, helped the currency gain, a foreign exchange trader at a mid-sized foreign bank said.
The rupee benefited from “both fundamentals and flows” on Tuesday as the dollar index fell to its lowest level since January and crude oil prices also declined, the trader added. Brent crude oil futures were last quoted down 0.2% at $77.48 per barrel, amid easing supply concerns and as China’s economic weakness weighed on the demand outlook. The rupee’s regional peers were mostly higher, with the Indonesian rupiah up 0.7% and leading gains. “Asian currencies have continued to strengthen against the US dollar on the back of broad U.S. dollar weakness and risk-on sentiment,” MUFG Bank said in a note.
The rupee has found some relief this week after hovering close to record low levels for much of last week, pressed by outflows from local stocks and strong dollar demand from importers.
Benchmark Indian equity indexes, the BSE Sensex and Nifty 50, ended the day higher by about 0.5% each.
The focus this week lies squarely on remarks from Federal Reserve policymakers, including Chair Jerome Powell who is slated to speak on Friday.
The remarks, alongside the minutes of the Fed’s July policy meeting due on Wednesday, will influence expectations of the extent and pace of rate cuts by the U.S. central bank.
