The Indian rupee closed little changed on Friday but logged its strongest week-on-week rise in nearly three months following a recovery from its all-time low hit last week.
The rupee INR=IN ended at 83.34 against the U.S. dollar, barely changed from its previous close at 83.3150.
The currency logged a weekly rise of 0.15%, its strongest since the week ended Feb. 2.
The rupee had dropped to its record low of 83.5750 last week but has since recovered following intervention from the Reserve Bank of India and the ebbing of concerns about an escalation in the Middle East conflict.
In the near term, the domestic currency is expected to hold its prevailing range with potential gains capped near 83.20, Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services, said.
The dollar index was at 105.6, while most Asian currencies were rangebound.
The 10-year Treasury yield was at 4.68%, hovering close to its highest level since November after a hotter-than-expected US inflation print for the January-March quarter bolstered expectations that the U.S. Federal Reserve will keep policy rates elevated for longer.
The delay in potential rate cuts by the Fed on one side and expectations that the RBI will prevent sharp weakness on the other should keep the rupee contained, a foreign exchange trader at a state-run bank said.
Chances of a Fed rate cut in June have been nearly priced out, while those for July have declined to about 30%, according to the CME's FedWatch tool.
U.S. personal consumption expenditure (PCE) inflation data due later in the day will be in focus for further cues on the Fed's policy rate trajectory.
"A higher-than-expected US inflation print yesterday is likely to be followed by another one today," ING Bank said in a note.
