Indian importers took advantage of the rupee’s rebound against the dollar last week to hedge their future foreign currency obligations, data showed.

Average dollar purchases by importers rose to $1.64 billion last week after the reporting date, from $1.14 billion the week before, the latest data compiled by The Clearing Corporation of India Ltd (CCIL) revealed.

The CCIL publishes daily client futures on its website with a two-day delay.

The rupee was up 1.7 percent against the dollar for the week ended January 13, its best performance in two months on the back of benign US inflation numbers. The data reinforced expectations that the US Federal Reserve will decide on a smaller rate hike on February 1st and that it was on the verge of halting its cycle of interest rate hikes.

“The outlook for the rupee remains challenging and the decline (to USD/INR) was a good opportunity, with volumes returning after a quiet first week of the year,” a private bank FX sales manager declined to be identified before speaking to media may, he said.

The rupee’s outlook was hurt by India’s large trade deficit and weak portfolio flows. The trade deficit, which has cooled from a record nearly $30 billion in July, remains high by historical standards.

India on Monday reported a goods trade deficit of $23.76 for December. Meanwhile, foreign investors have withdrawn about $2 billion from Indian stocks and debt so far this month.

“Despite the improving Fed outlook, the rupee is in a tough environment,” said Kunal Kurani, associate vice president at Mecklai Financial, which advises clients to buy if the dollar falls significantly.

Most economists expect the Fed to hike rates by 25 basis points at each of its next two meetings. Futures are pricing in modest rate cuts later this year.

The importers he advises selectively bought dollars last week for January-March short-term maturities, he said.