MUMBAI, Sept 4 (Reuters) - The Indian rupee ended largely unchanged Friday, but posted its best weekly performance against the U.S. dollar in five weeks, helped by stronger-than-expected dollar inflows into the central bank's special schemes.
The rupee moved in a narrow six paisa range before ending at 94.4850, aided by the Reserve Bank of India, which intervened at the start of the session and continued to sell dollars thereafter, traders said.
For the week, however, the currency gained 0.9%, posting its biggest rise against the dollar since the week ended July 31, aided by heavy RBI intervention. The rupee was also supported by an influx of dollars that far exceeded estimates.
The RBI repeatedly sold dollars near the open through the week. The central bank's increasingly forceful intervention comes as its special schemes drew more than $136 billion in June-August.
Its stepped-up presence has reinforced expectations that the RBI is using its increased firepower to steer the rupee higher.
"Overall, the FCNR (Foreign Currency Non-Resident) story has given the rupee a strong shot in the arm, but the underlying fundamentals still carry their share of risk, and 94.00–94.20 remains a strong support zone (for USD/INR)," CR Forex said in a note.
The rupee's weekly rise comes despite a rally in oil prices, with the benchmark Brent crude contract set for its steepest weekly advance since mid-July on renewed military tensions between the U.S. and Iran.
The Brent crude contract hovered at around $96 per barrel in Asian hours. Higher oil prices weigh on the rupee by worsening the inflation outlook and current account deficit in major importer India.
Attention will now turn to key U.S. data ahead of the Federal Reserve's September meeting, with nonfarm payrolls due later on Friday and inflation data next week likely to shape expectations for the central bank's policy path.
Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala, Nivedita Bhattacharjee and Sonia Cheema
Source: Reuters