Indian rupee hits its highest level in more than a week on weak dollar and oil prices

An Indian rupee note is seen in this June 1, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

MUMBAI, Sept 9 (Reuters) – The Indian rupee hit a more than a week high against the U.S. currency on Friday as the dollar index fell further from its two-decade high hit earlier this week. early this week.

The rupee was trading at 79.6350 per US dollar as of 0502 GMT, down from 79.71 in the previous session. The local currency had reached 79.57 earlier in the session.

Over the week, the rupiah gained around 0.2% and is heading for its best performance in seven weeks.

The dollar index fell 0.8% to 108.84 and was on course for its worst session in a month. The gauge had climbed to nearly 110.80 earlier this week, the highest in 20 years.

Brent crude futures have been hovering around $89.50, losing about 18% since the start of August.

Lower oil prices and a weaker dollar are “enough” for traders to add speculative short positions in the rupiah, said Anindya Banerjee, head of research – fx and interest rates at Kotak Securities.

Foreign equity inflows are holding up well and this is another good news for the rupiah, Banerjee said.

Foreign investors have bought about $350 million worth of Indian stocks so far this month after buying $6.5 billion in August, according to NSDL data.

The euro was the main reason for the decline in the dollar index. The European Central Bank raised its key rate by 75 basis points on Thursday and said it planned to continue raising rates to dampen demand, prioritizing the fight against inflation. Read more

Meanwhile, rupee futures premia fell, with the 1-year implied yield slipping to 2.88%, weighed down by a hawkish Federal Reserve and falling oil prices.

Euro-rupee futures and other rupees traded on the NSE rose. Dollar-rupee futures fell slightly and open interest on them was slightly lower.

Indian equities advanced, trailing a slight rise in US stock futures and Asian peers.

Reporting by Nimesh Vora; Editing by Subhranshu Sahu

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