India rupee bundles
India Rupee Bundles Reuters

The Indian rupee strengthened on Wednesday, extending the railway budget-triggered upside on Tuesday, but concerns ahead of Thursday's federal budget prevented sharper moves in the currency.

At 8:47 GMT, USD/INR traded at 59.72 from the previous close of 59.76.

The pair had fallen 0.3% on Tuesday as the railway budget proposed more foreign direct investment into infrastructure development.

Traders expect a range of 58.50-60.0 in the coming weeks, suggesting more downside room for the pair from the current levels.

"The federal budget is going to be a positive for rupee as it will boost long-term growth prospects of the country," S Kamalakar Rao, chief forex dealer at Allahabad Bank, told IBTimes UK.

The Mumbai-based trader, however, added that much of the positives have already been priced in by the market.

Overall Trend

The rupee has been on the upward trend so far this year, and from end-December, it traded more than 3.5% stronger at Wednesday's level.

The uptrend in the USD/INR pair since May, triggered by oil price rises after the Iraq crisis, has been contained well within the downward channel.

That shows any clear indication of stronger fiscal supportive measures from the new government's maiden budget will take the pair further lower.

On the way down, the first levels to target are 59.50 and 58.88 ahead of 58.23, the May low. A break below that will expose 57.50, the channel support.

On the higher side, USD/INR has its first resistance at 60.50 and then comes 60.85-61.20. A break of that will reverse the downtrend this year and open doors to levels like 63.45.

USD/INR Daily IBTimes UK/FXStreet