Dollar inflows related to the Mankind Pharma listing and a private equity deal had driven initial gains in the currency, several traders said. The rupee rose to a seven-week high of 81.62 per dollar during the session, finding strong resistance near 81.60 levels. Those gains reversed once the initial public offering was fully subscribed and there was some short covering before market close, said market participants, who pointed to dollar buying by state-run and private banks. "We don't think the rupee has more steam to appreciate beyond 81.50 and will consolidate in the range between 81.50 and 82.50 in the coming days," said Arnob Biswas, FX research analyst at SMC Global Securities.
The next major trigger for the currency would be the U.S. Federal Reserve decision on May 3, where a 25 basis-point rate hike is widely expected. The dollar index has been rangebound in the run-up to the meeting, as worries over the health of the banking sector and the Fed's rate hike trajectory have weighed. On Thursday, the ongoing wrangling over an extension to the U.S. debt ceiling also pressured the dollar.
The dollar index recovered marginally late in the session to 101.450 levels. Asian currencies remained mixed as the offshore Chinese yuan dipped, but the Indonesian rupiah jumped. U.S. March-quarter GDP data and weekly jobless claims are due later in the day, which should help investors gauge how the economy is faring and the strength in the labour market.
(Reporting by Anushka Trivedi; editing by Eileen Soreng)
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