MUMBAI, March 17 (Reuters) – The Indian rupee strengthened on Monday, boosted by dollar sales from foreign banks and as the greenback lingered near a 5-month low against major peers on worries about a slowdown in the world’s largest economy.
The rupee touched a peak of 86.8075 in early trading, its highest level since February 24. It trimmed some of its gains, with traders last quoting at 86.8450 as of 10:55 a.m. IST, up nearly 0.2% on the day.
Asian currencies were mostly range-bound while the dollar index was also little changed at 103.7.
Foreign banks were spotted offering dollars in early trading, which helped the rupee, a trader at a state-run bank said.
“Over the last few days, we have seen this pattern of foreign banks being present on offer (on USD/INR) early in the session and on the other side towards the afternoon,” the trader added.
Broad weakness in the dollar has allowed the rupee to find some breathing room with the local unit up 0.6% over March so far, even as foreign selling of Indian stocks continued to exert pressure.
Bank of America currently recommends long bets on high-yielding currencies, including the rupee, the bank said in a note.
The rupee benefits from a softer dollar, lower oil prices and carry flows alongside a seasonally favourable current account, the note said.
India’s trade data is due later in the day, with merchandise trade deficit expected to ease to $21.65 billion in February, according to a Reuters poll.
On the flip side, BofA expects the offshore Chinese yuan to underperform peers as the county’s central bank will lean against appreciation in an effort to keep monetary conditions loose. (Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
