Rupee touches 4-month high of 84.96/$, but closes at 85.23

Mumbai: The Indian rupee appreciated past the 85/$1 mark to touch a four-month high of 84.96, before closing at 85.23 on Friday, 20 paise stronger from its previous close of 85.43.

The unit weakened in the latter half of the day due to corporate hedging demand and a slight uptick in the dollar index. The Reserve Bank of India (RBI) likely absorbed dollars as the rupee appreciated past the 85/$1 mark, traders said.

The dollar index declined to 101.27, but mildly strengthened to 102.66 later during the day. The rupee moved in the range of 84.95-85.33 to a dollar.

"Today's strengthening of the rupee is majorly due to retraction in the dollar index. As China imposed tariffs on the US, the dollar index strengthened a bit, which can be seen as the rupee weakened in the latter half of the day," said Dilip Parmar, currency research analyst, HDFC Securities.

Markets are now in a wait-and-watch mode, especially when it comes to tariff negotiations by different countries with the US and expect the volatility to continue, traders said.

"The RBI likely intervened in the market and absorbed dollars to contain excess volatility, or we would have seen the rupee strengthen further. The RBI seemed to have bought dollars via private banks," a currency dealer said.

Markets will now be looking at the non-farm payroll (NFP) data from the US to gauge the quantum of rate cuts in 2025 by the US Federal Reserve. The NFP data is one of the most important variables considered by the US Fed when it comes to deciding on the trajectory of interest rates in the US.