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The Indian Rupee (INR) extended its two-day winning streak against the US Dollar (USD) on Friday, driven by increased foreign currency non-resident (FCNR-B) inflows and dollar selling by exporters. The USD/INR pair fell to 83.25, reflecting improved risk appetite and reduced pressure on the Rupee amid stable foreign exchange flows. Analysts attribute the move to seasonal factors, including year-end tax settlements and corporate repatriation of earnings, which typically boost INR demand.
For forex traders, the Rupee's strength highlights the importance of monitoring emerging market currencies against the USD, especially as global central banks navigate divergent monetary policies. The Reserve Bank of India's (RBI) recent hawkish stance and India's current account surplus also provide a supportive backdrop. However, volatility remains a risk due to potential shifts in global risk sentiment or changes in oil prices, which impact India's trade balance.
Looking ahead, traders should watch the RBI's policy decisions and India's upcoming GDP data for further clues on Rupee momentum. The USD/INR pair could test key support levels at 83.00 and 82.50 if the positive trend continues. Geopolitical tensions in the Middle East and fluctuations in crude oil prices may also influence the currency's trajectory in the coming weeks.
