India witnessed a massive flight of capital by foreign investors when equity markets fell in March due to the COVID-led lockdown. In March and April, foreign investors liquidated investments worth $8.3 billion, putting downward pressure on the rupee.
India's currency, the rupee, strengthened to its highest level in more than five months on Friday morning on the back of inflow of the greenback into the equity markets.
The Indian rupee strengthened to a high of 73.51 per dollar, which is its strongest level against the greenback since 5 March. On Thursday, the rupee closed at 73.83 per dollar.
Domestic broking agency IIFL said: "The Indian rupee strengthened to its highest level in nearly six months on Friday amid sustained foreign fund inflows, positive domestic equities and a weak US dollar".
The Indian currency has been gaining ground against the dollar over the past week on the back of sustained dollar inflows into the Indian equity markets, according to currency market sources.
A currency trader said that at least $5.33 billion have been invested by overseas investors in the Indian equity market in August, thereby pushing the Indian currency up against the dollar.
Pic. credit: © AP Photo / Ajit Solanki