The Indian rupee closed modestly higher on Friday ​but logged a weekly fall as dollar demand related to ‌merchant flows, arbitrage trades and maturities in the ​non-deliverable forward market outweighed comfort from a broadly ⁠weaker U.S. dollar.The rupee declined nearly 1% on the week to close at 95.21 per dollar, slipping past the ‌95 per dollar level for the first time in three weeks.Improved foreign portfolio inflows ‌into government bonds and expectations of a balance of ‌payments ⁠surplus for the year ending March 2027 ⁠has improved sentiment on the rupee, even though day-to-day flows continue to pinch the unit, traders and analysts said.“USD/INR has been on ​a rollercoaster ride even ‌before the Iran conflict, driven by a combination of weak capital inflows and also rising foreign direct investment repatriation. Nonetheless, RBI’s FX measures have started to ‌stabilise the Indian rupee,” MUFG said in a ​note.The measures include incentives to draw inflows via dollar deposits and overseas borrowings.India’s ICICI ⁠Bank is mulling its first dollar bond sale in nearly nine years, after peers HDFC Bank and Axis Bank ‌used the central bank’s lower-cost hedging facility for foreign-currency issuance, Reuters reported earlier in the day.During the week, dollar demand linked to maturing positions in the NDF market and large merchant payments pressured the rupee.“It (USD/INR) is sticking to the trend of following the dollar ‌higher but lagging on the way down,” a trader at ​a private bank said.The dollar index was down 0.2 per cent at 100.7 and on course for its ⁠biggest weekly loss in 12 weeks on Friday ⁠after a tepid U.S. jobs report cooled market expectations for a near-term Federal Reserve interest rate ‌hike.Markets are now pricing in about a 53 per cent chance for a hike at the September meeting, ​according to LSEG data. Published on July 3, 2026