The rupee closed at 86.8725 against the U.S. dollar, up nearly 0.3% on the day. The currency also rose 0.7% week-on-week, its best performance since February 2023 with the dollar on course for its worst week in over two years.
Worries about a slowing U.S. economy and back-and-forth in tariff policies weighed on the dollar this week. The greenback also weakened as the euro rallied on the back of the European Central Bank‘s hawkish rate cut and surging bond yields after Germany’s massive spending proposal.
The dollar index is down over 3.5% so far this week, while the euro is trading at its strongest level against the greenback since November 2024. Asian currencies were up 0.1% to 0.4% on Friday.
Along with a weaker dollar, traders also pointed to strong dollar sales by a local bank that helped lift the rupee after it slipped below 87.20 in early trade.
“For now, we are recommending that importers cover their unhedged positions on levels between 86.50 and 87,” said Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group. Attention is on Friday’s U.S. non-farm payrolls report and remarks by Federal Reserve Chair Jerome Powell, both of which will influence rate cuts expectations and the dollar’s trajectory. Economists polled by Reuters expect that the world’s largest economy added 160,000 jobs in February, while the unemployment rate was unchanged month-on-month at 4%.
“Unless we get a big downside miss in today’s jobs reports, a little consolidation in the 103.75-104.50 area (for the dollar index) may be the order of the day,” ING Bank said in a note.
