Indian rupee strengthened on Friday to a three-week high against the dollar after Bloomberg quoted an analyst at Standard & Poor's calling the government's target to lower the fiscal deficit a positive for the country's ratings.
"The fiscal policy stance has been a constraining factor for India's sovereign ratings for some time," Bloomberg quoted S&P's associate director of sovereign ratings, Agost Benard, as saying.
"If authorities can deliver on their fiscal goals resulting in a lower debt and interest burden that would benefit India's credit fundamentals," he was also quoted as saying.
The partially convertible rupee rose to as high as 60.3750 per dollar, its strongest level since July 31, but had eased to 60.45/46 by 12:33 p.m. It closed at 60.61/62 on Thursday.
The government has a fiscal deficit target of 4.1 per cent of gross domestic product for the year ending in March 2015.
Early trade: Indian rupee gains 15 paise to to 60.52 against US dollar
The rupee gained 15 paise to 60.52 against the US dollar in early trade at the Interbank Foreign Exchange market today amid sustained overseas capital inflows.
Increased selling of the American currency by banks and exporters amid sustained inflows of foreign funds supported the rupee, forex dealers said.
Besides, a higher opening in the domestic equity market also helped the rupee but the dollar's gain against other currencies overseas ahead of the US Federal Reserve chief's speech for any hint at when the bank will start raising interest rates, capped the rise, they added.
The rupee had retreated from three-week high and ended six paise down at 60.67 against the dollar on demand from importers for the US currency in yesterday's trade.
Meanwhile, the benchmark BSE Sensex rose 111.09 points, or 0.42 per cent, to 26,471.20 in early trade.