The Indian rupee rose sharply in early trading on Friday to climb past 84 per U.S. dollar for the first time since October 2024, driven by heavy dollar sales from foreign banks and strength in regional currencies.

The rupee climbed to a peak of 83.83, up 0.7% from its close at 84.4875 in the previous session. The currency is now up nearly 2% on the week.

A pick up in dollar inflows into Indian equities, optimism about a U.S. trade deal and a liquidation of short bets against the currency have all been tail winds for the rupee over recent sessions, traders said.

Foreign institutional investors have bought Indian shares for 11 straight sessions, the longest streak of inflows in two years

The rupee's sharp gains over recent sessions has also prompted analysts to adjust their outlooks on the local unit with MUFG expecting the currency to end the year at 84, up from 87 per its earlier forecast.

"We now forecast INR to outperform Asian FX with our global team's call for more US Dollar weakness together with better than anticipated tariff outcomes for India in Trump 2.0," MUFG said in a Friday note.

On the day, foreign banks were spotted offering dollars, likely on behalf of custodial clients, while bids were relatively scant, helping the rupee climb over the 84 figure, a trader at a state-run bank said.