MUMBAI, April 5 Reuters The Indian rupee strengthened to an over threeweek high against the U.S. currency on Wednesday, as traders said foreign banks were selling dollars amid improved risk appetite in the market.

The rupee finished up 0.41 to 82.00 per dollar, having firmed to its highest since March 13 at 81.92, in a session where the Nifty 50 and SP BSE Sensex rose around 1 each.

Foreign banks sold dollars, likely on behalf of their custodial clients, while stop losses were triggered once 82.08 was breached, traders said.

USDINR has faced rejection at that level on a couple of occasions in recent days, which some traders thought the Reserve Bank of India RBI had been buying dollars at.

The inflows on Wednesday could also be related to a corporate fundraising, two dealers said.

The dollar index remained subdued after declining 1 over the past two sessions, as weak U.S. job openings and manufacturing data stoked hopes the U.S. Federal Reserve would tone down its aggressive monetary policy stance.

Nearmaturity 2year Treasury yield dropped 14 basis points bps overnight, as markets priced 75 bps worth of Fed cuts in the secondhalf of the year.

With bond markets pricing an end to rate hikes soon from major central banks, a new cycle in risk assets may not be far away, said Anindya Banerjee, head of research FX and interest rates at Kotak Securities.

Odds of a pause or a 25 bps hike at the Fed39;s May meeting had gone back to being almost even, after leaning…