MUMBAI, May 5 (Reuters) - The Indian rupee strengthened on Monday on the back of modest portfolio inflows and a stronger yuan as easing U.S.-China trade tensions boosted emerging market currencies in Asia.

The rupee was at 84.2850 as of 10:30 a.m. IST, up 0.3% on the day. The currency rallied to a peak of 83.77 on Friday before reversing course on the back of likely dollar-buying intervention by the Reserve Bank of India.

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On the day, the offshore Chinese yuan rose to a near six-month high of 7.1876, buoyed by optimism about trade talks between China and the United States.

Beijing is considering ways to address the Trump administration's concerns about China's role in the fentanyl trade, the Wall Street Journal reported on Friday, providing a potential off ramp for the recent spate of hostilities on trade.

U.S. President Donald Trump said though he had no plans to speak with Chinese President Xi Jinping this week, U.S. officials were speaking with Chinese officials about different things.

The Taiwan dollar was up 3%, leading gains in Asia after the local government said on Saturday it had ended its first round of "substantive" tariff talks with the U.S. The dollar index, meanwhile, declined 0.1% to 99.7.

The rupee is expected to hover between 84 and 84.75 on Monday with risks skewed towards appreciation, said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

Dollar-rupee forward premiums, meanwhile, slipped as traders pared hopes of rate cut by the Federal Reserve in June after U.S. jobs data came in stronger than expected. The 1-year implied yield was down 5 bps at 2.22%.

Markets now see a 37% chance of a Fed cut in June, down from 64% a month ago.

The Fed is widely expected to keep rates unchanged on Wednesday and investors will pay attention to remarks from Chair Jerome Powell.

https://www.reuters.com/world/india/rupee-lifted-by-modest-inflows-stronger-yuan-forward-premiums-slip-2025-05-05/