Indian rupee gains strength by uptick in Asian peers

• The Indian rupee strengthened on Friday, with a 0.11 percent increase against the UAE dirham.
• The dollar index remained at 103, influenced by a dip in US treasury yields.
• Most Asian currencies, particularly the Indonesian rupiah, saw a 0.6% increase.

Boosted by gains in its Asian counterparts and positive sentiment following the presentation of the domestic budget, the Indian rupee strengthened on Friday. As of 8.55 am local time, the rupee stood at 22.58 against the UAE dirham, marking a 0.11 percent increase compared to its close at 22.606 in the previous session.

The dollar index, which had fallen nearly 0.5 percent on Thursday, remained little changed at 103, influenced by a dip in US treasury yields. Most Asian currencies, particularly the Indonesian rupiah, saw advances, with a 0.6 percent increase.

In Asia hours, the 10-year US treasury yield, which had fallen 10 basis points (bps) on Thursday, was last quoted slightly higher at 3.89 percent.

US bond yields fell amid safe-haven demand due to renewed concerns about US regional banks and in light of data that showed jobless claims rose more than expected for the week ended January 27.

Dollar sales:

A foreign exchange trader at a private bank attributed the rupee’s gains on Friday to broad-based dollar sales. The trader added that the ‘double bonanza’ of a drop in US yields and positive sentiment following the presentation of India’s budget on Thursday is likely to support further appreciation in the local unit.

In the budget, the Indian government set lower-than-expected fiscal deficit and gross borrowing targets for the financial year starting April 1, a move likely to aid debt inflows into India.

Apurva Swarup, vice president at Shinhan Bank India, stated that the dollar-rupee pair is expected to trade with a ‘sell on upticks’ bias on Friday. Meanwhile, rupee forward premiums declined, with the 1-year implied yield falling 3 bps to 1.82 percent.

Investors will now closely monitor the US non-farm payrolls data, scheduled for later on Friday.

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