The Indian rupee strengthened to a near three-week peak on Wednesday, closing at 95.6475 per US dollar, up 0.2% from the previous session.
The move marks a notable reversal from recent weakness, with the currency trading well off the 95.85 level seen earlier in the week.
Traders are positioning for a potential further advance, with expectations pointing toward a trading range of 95.12-95.16 in the coming session.
The rupee’s firming is being driven by a rally in local equities and sustained portfolio inflows, which have provided a counterweight to broader emerging-market headwinds.
Despite the currency’s strength, market participants are pricing in higher uncertainty, with implied volatility ticking up as the Federal Reserve’s upcoming policy decision approaches.
The central bank’s stance on interest rates remains a critical variable for emerging-market currencies, including the rupee.