Indian rupee posts biggest single-day gain in two months on strong growth data

By Sethuraman N R

MUMBAI (Reuters) - The Indian rupee saw its best single-day gain in two months on Thursday, and also rose to a two-week high during the session, following strong domestic growth data, which prompted traders to square off long dollar positions.

The rupee closed at 82.405 against the U.S. dollar, compared to 82.7225 on Wednesday, after touching 82.3675 during the session, its highest since May 18. On Thursday, the rupee rose 0.38%, to mark its best day since April 5.

Consistent flows into equities coupled with strong economic data is supporting the rupee, said Dilip Parmar, a research analyst at HDFC Securities.

The USD/INR, though, is expected to see strong support around the 82.30 zone, Parmar said.

India's economic growth accelerated to 6.1% in the March quarter, higher than what economists had expected, confirming that the country remains one of the fastest growing emerging economies.

Adding to strong growth numbers, India's factory output expanded at the quickest pace since October 2020 in May, thanks to strong demand and output, a private survey showed.

The string of positives for the rupee has prompted USD/INR long positions to lose patience, a sales person at a private bank said.

The rupee was also helped by comments from two U.S. Federal Reserve policymakers that indicated that they were not in favour of raising rates in June.

The probability of a rate hike by the Fed dropped to about 38% from 67% seen earlier this week.

The dollar index stood firm close to over a two-month high hit on Wednesday.

(Reporting by Sethuraman NR in Mumbai; Editing by Sonia Cheema)