“The recent correction in rupee valuation and near-term improvement in current-account and capital flows tilt the risk-reward in favour of rupee appreciation,” Abhay Gupta, a strategist at BofA Securities, wrote in a note. The firm has turned ‘constructive’ on the rupee.

The currency was the worst performer among emerging Asian peers last year, weighed by concerns over a wider current-account deficit and a stronger dollar spurred by rate hikes by the Federal Reserve. The outlook is now changing after a surprise drop in India’s trade deficit prompted economists to cut their forecasts for the shortfall.

The rupee is up 0.1% against the dollar this year and is in the lower pack among Asian currencies, while its high-yielding counterpart, the Indonesian rupiah is up 2.6%. It is closing in on its record low of 83.2912 to a dollar seen in October.

Citigroup Inc last week recommended a tactically bullish relative rupee exposure as it expects seasonal outperformance and the rupee’s nominal effective exchange rate to strengthen into the end of its fiscal year, it said in a note.

The “rupee’s carry-to-vol is attractive within EM, RBI’s reserves have recovered, REER index declined and INR volatility is lower,” Gupta wrote. “Debt inflows have started to trickle in as India bonds still offer better carry compared to the region with low currency volatility.”