The rupee strengthened 16 paise against the dollar on Friday as the decision to add India’s sovereign bonds to JP Morgan’s emerging market bond index stoked hopes of increased foreign exchange inflows.Market sentiments were buoyed by JP Morgan’s inclusion of India in the GBI-EM Global index suite from 28 June. India will reach 10% weight of the GBI-EM Global Diversified Index in 10 months, the index provider said. The Indian currency opened at 82.83 against the dollar compared with Thursday’s closing of 83.09 and closed at 82.94. The currency has lost 1% in the past three months.Currency experts expect the rupee to trade in the range of 82.50-83.30 in the near term. They said that although the flows will begin next year, Friday’s movement was fuelled by positive sentiment surrounding the news.“The flows are substantial, but they are going to kick in only in June, and there is a long way to go. Today’s appreciation has more to do with the sentiment,” said Dipti Chitale, director of Mecklai Financial Services Pvt Ltd.The inclusion, Chitale said, is extremely positive news, and the market has been waiting for it for years. She expects the rupee to trade in the range of 82.60 to 83.30 to the dollar in the short term. “External factors that influence the rupee have not been in its favour. Otherwise, you would have seen substantial appreciation in the rupee even if it is just a sentiment,” she said.Others said the rupee would have appreciated more had it not been for an indirect intervention by the central bank.“RBI is there every day in the market, and they were there today, too. The USD-INR has unofficially become an RBI-controlled currency pair and is the reason why it has been the least volatile dollar pair globally if you look at the last two years,” said Anindya Banerjee, vice president of currency derivatives and interest rate derivatives at Kotak Securities Ltd.Today, Banerjee said, RBI seems to have encouraged oil refiners to purchase dollars. “From what I have noticed, RBI becomes jittery and intervenes if there is volatility beyond 20 paise,” he said.Apart from the flows which will begin when the bonds are actually included in the global index, there will also be a gush of money when the interest rate cycle turns in the US, Banerjee said. “In such a situation, a window of flow can become substantial.”Economists said that while the rupee will tend to appreciate, it is fair to assume RBI will intervene to keep it range-bound.Madan Sabnavis, chief economist of Bank of Baroda, said in a note that he expects the rupee to be in the 81-84 range against the dollar in the next year, provided other conditions remain unchanged.Meanwhile, Deutsche Bank said in a recent report that RBI can spend at least $30 billion to defend the rupee. Despite that, the import cover will remain around 10 months, according to its estimates. Import cover indicates the number of months a country’s foreign exchange reserves can support its imports.