MUMBAI: Persistent dollar bids from Indian companies and foreign banks weighed on the rupee this week, making it a laggard among Asian peers and blunting the positive impact of a truce between India and Pakistan.

The currency hit a peak of 84.6250 in the immediate aftermath of the India-Pakistan ceasefire, but was unable to sustain the gains.

Traders said robust dollar-buying from state-run and foreign banks, likely on behalf of their clients, kept the rupee on the back foot.

The currency was slightly lower on Friday at 85.66 per U.S. dollar, reversing early gains on outflows spurred by an equity block deal, traders said.

The rupee fared worse on the day and week compared to regional peers, including the offshore Chinese yuan, which is up 0.6% week-on-week while the rupee is on course for a decline of more than 0.2%.

Asian countries’ FX policies featuring in U.S. trade negotiations have been a tailwind for currencies.

“From Asian FX markets more broadly, whether any trade deal (with the U.S.) will be struck will be key for the dispersion of outcomes,“ MUFG said in a note.

While uncertainty about a trade deal has contributed to the rupee’s underperformance, MUFG reckons that a deal is “more likely than not,“ given the ongoing bilateral discussions.

U.S. President Donald Trump said on Thursday that India had offered a zero-tariff trade deal.

India’s trade minister will lead a trade delegation to the United States starting May 16 to advance trade negotiations, Reuters reported earlier this week.

Dollar-rupee forward premiums were a tad higher on the day as soft U.S. economic data lifted hopes of Federal Reserve rate cuts later this year. The dollar index was a tad down at 100.7.