MUMBAI, Sept 20 Reuters The Indian rupee strengthened against the U.S. dollar on Friday and was on course to post its best weekly gain this year, after the Federal Reserve embarked on its policy easing cycle with an oversized 50basispoint interest rate cut earlier in the week.

The rupee rose 0.1 to 83.5450 against the dollar, as of 1035 a.m. IST, up from Thursday39;s close at 83.68.

Dollar offers from foreign banks alongside likely unwinding of dollarrupee long positions in the nondeliverable forwards NDF market helped lift the rupee on Friday, a trader at a staterun bank said.

The rupee has logged consecutive gains over the last five trading sessions and is up 0.4 weekonweek, on course for its best weekly gain since December 2023.

Alongside the Fed39;s rate cut, an improvement in portfolio inflows has helped the local currency. Overseas investors have net bought more than 7 billion of local stocks and bonds over September, their highest monthly inflows over 2024.

The dollar index was hovering close to its yeartodate low of 100.5, while most Asian currencies climbed.

The Reserve Bank of India also seems to have loosened its iron grip on the USDINR pair, contributing to the recent price action, said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors.

Meanwhile, dollarrupee forward premiums continued to rise, with the 1year implied yield up 3 basis points at 2.35, its highest level since April 2023.

The 1year implied yield has risen 11 bps over…