Rupee on course for best week in 2024, forward premiums maintain uptrend
By Jaspreet Kalra
MUMBAI, Sept 20 (Reuters) -The Indian rupee strengthened against the U.S. dollar on Friday and was on course to post its best weekly gain this year, after the Federal Reserve embarked on its policy easing cycle with an oversized 50-basis-point interest rate cut earlier in the week.
The rupee INR=IN rose 0.1% to 83.5450 against the dollar, as of 10:35 a.m. IST, up from Thursday's close at 83.68.
Dollar offers from foreign banks alongside likely unwinding of dollar-rupee long positions in the non-deliverable forwards (NDF) market helped lift the rupee on Friday, a trader at a state-run bank said.
The rupee has logged consecutive gains over the last five trading sessions and is up 0.4% week-on-week, on course for its best weekly gain since December 2023.
Alongside the Fed's rate cut, an improvement in portfolio inflows has helped the local currency. Overseas investors have net bought more than $7 billion of local stocks and bonds over September, their highest monthly inflows over 2024.
The dollar index was hovering close to its year-to-date low of 100.5, while most Asian currencies climbed.
The Reserve Bank of India also seems to have "loosened its iron grip on the USD/INR pair", contributing to the recent price action, said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors.
Meanwhile, dollar-rupee forward premiums continued to rise, with the 1-year implied yield INRANPRM1Y=RR up 3 basis points at 2.35%, its highest level since April 2023.
The 1-year implied yield has risen 11 bps over September so far, boosted by expectations that the Fed will push borrowing costs lower.
Odds of another 50-bp rate cut by the Fed in November have risen to 43%, up from 37% a day earlier, according to CME's FedWatch tool.
Reporting by Jaspreet Kalra; Editing by Rashmi Aich
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