The Indian rupee closed lower to halt a nine-day winning run on Tuesday as importers stepped in to hedge liabilities at favourable levels, dollar inflows moderated and the local currency’s regional peers slipped.

The rupee ended at 85.7550 against the U.S. dollar, down 0.14% on the day. It had risen to a year-to-date peak of 85.49 on Monday and is up about 2% on the month so far.

Intermittent inflows from overseas portfolio investors and the repatriation of corporate dollar-based earnings ahead of the fiscal year ending March 31 have helped the rupee outpace its Asian peers this month.

The recent string of gains has come as a relief for the local unit after it hit a string of record lows till mid-February.

MUFG has revised its view on the rupee to ‘neutral’ from ‘cautious’, and now expects it to end calendar year 2025 at 87.50, stronger than its earlier forecast of 88.50, it said in a note.

From current levels though, risks on the rupee are tilted lower, it added, pointing to likely underpricing of India’s vulnerability to U.S. tariffs, relatively soft growth, possibility of an inflation uptick and lingering pressure on Asian currencies.

“Lastly, RBI should, at some point, come in to build FX reserves, even as it has been more hands-off than we anticipated so far,” the note added.

On the day, the dollar index was a tad higher at 104.3 while Asian currencies were down between 0.1% to 0.3%.

Dollar-rupee forward premiums rose, with the 1-year implied yield touching a more than one-month high of 2.23% after the results of the Reserve Bank of India’s $10 billion FX swap auction were announced after market hours on Monday.

U.S. consumer confidence data and remarks from Federal Reserve officials will be in focus later in the day.

(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)