The Indian rupee on Wednesday hit nearly three week high against US dollar on likely foreign inflows following ArcelorMittal’s acquisition of Essar Steel.

Optimism over US-China trade deal also boosted appetite for risky emerging market assets.

At 9.10am, the domestic currency was trading at 71.42 a dollar, up 0.10% from Tuesday's close of 71.73. The Indian unit had opened 71.71 a dollar.

Analysts expect around $6 billion foreign inflow this week on account of the ArcelorMittal-Essar Steel deal. On 15 November, Supreme Court ruled that the Committee of Creditors of the Indian company has rights to decide on distribution of funds realised from the sale of its insolvent assets.

Traders also eye key gross domestic product data for September quarter, due on Friday. GDP growth is likely to have slowed to 4.6% in the September quarter, the least since the first three months of 2013, according to a median of estimates polled by Bloomberg.

“Broadly market is looking for a phase-one trade deal before the end of 2019. This optimism led to depreciation in USD/INR. Then, government’s news of proposing new industrial policy further weighed on spot, however, it couldn’t breach the crucial support zone of 71.45. Therefore, in the coming days, we expect a small spurt in spot towards 71.75. For the week, we expect USD/INR to continue to trade in between 71.45-72," said Rahul Gupta, head of Research-Currency, Emkay Global Financial Services.

The yield on the 10-year Indian government bond was at 6.483% compared with its previous close of 6.484%.

In the year so far, the rupee has weakened 2.4%, while foreign investors have bought nearly $12.77 billion in Indian equities and $4.58 billion in debt.

Asian currencies were trading mixed. China renminbi was up 0.12%, Malaysian ringgit 0.07%, Taiwan dollar 0.04%, Philippines peso 0.04%. However, China Offshore was down 0.12%, Singapore dollar 0.07%, Thai Baht 0.06%.

The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 98.30 against the previous close of 98.25.

(Bloomberg contributed this story)