MUMBAI, March 17 (Reuters) – The Indian rupee strengthened against the U.S. dollar on Friday, as risk assets got some relief following bank rescues in the U.S. and Europe, with the local currency holding near a key resistance zone.
The rupee was trading around 82.46 per dollar at 11:15 a.m. IST, compared to its previous close of 82.73.
The currency strengthened past the key 82.50-level and we do expect some more dollar sales as risk appetite has improved, but the 82.40-82.50 zone tends to be an area of resistance, a trader said.
If the currency manages to strengthen past it in a sustainable manner, then further gains are likely, the trader added.
After a week of turmoil in the markets over bank failures in major economies, Asian shares and currencies rebounded on Friday, as the dollar index fell 0.3%.
U.S. stocks set the tone overnight, with the S&P 500 index rallying nearly 2% on news that a large group of banks were infusing cash into First Republic Bank.
The recovery in shares of European lender Credit Suisse, after it received help from Switzerland’s central bank to shore up its liquidity, further helped revive risk appetite.
“Heading into the day, we expect the rupee to trade with an appreciation bias,” HDFC Bank economists wrote in a note.
Besides improved risk sentiment, low crude oil prices could support the currency, they added.
Oil prices have eased drastically as Brent crude futures fell over 8% this week to $75.43 per barrel.
Meanwhile, the European Central Bank on Thursday pushed ahead with a 50 basis point hike despite strains in the banking sector.
That, along with robust U.S. labour data has given more confidence to markets that the Federal Reserve would increase rates by 25 bps meeting next week. Some economists earlier reckoned a pause from the Fed was possible.
Reporting by Anushka Trivedi; Editing by Varun H K
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