The Indian rupee strengthened to a more than three-week high by Friday afternoon, as the US dollar remained under pressure on speculations that the Federal Reserve will slow its rate rise pace after the US economy unexpectedly shrank in the June quarter.

By 0837 GMT, the partly convertible rupee was trading at 79.24 per dollar, its highest level since July 7 and higher than Thursday’s closing of 79.7550.

The dollar fell roughly 1% versus the yen, causing the dollar index, which measures the currency against six major currencies, to fall 0.4 percent, its worst showing since early July.

Traders are now focusing on the Reserve Bank of India’s monetary policy meeting next week, where a 35 basis point (bp) boost seems more plausible than a 50 bp hike.

Source: Reuters

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