By Jaspreet Kalra
MUMBAI (Reuters) – The rupee fell to its weakest closing level on record on Friday even as likely intervention from the Reserve Bank of India helped limit the pressure from a decline in its Asian peers and persistent dollar bids from two large foreign banks pressured the currency, traders said.
The rupee closed at 83.6625 against the U.S. dollar, marginally lower compared with its close of 83.65 in the previous session. The currency was down 0.1% week-on-week.
The Reserve Bank of India likely intervened in the non-deliverable forward (NDF) market to cap deprecation in the currency, which had hit its all-time low of 83.6650 on June 20.
The RBI has intervened in the NDF market on multiple occasions previously, close to the time when the local over-the-counter market opens in order to help the rupee, traders said.
The central bank “has been present” in the NDF market but doesn’t appear keen to push the rupee higher, a trader at a foreign bank added.
The trader expects the RBI to allow gradual weakness in the currency but it’s likely to be limited near 83.70-83.75.
Asian currencies were mostly weaker, with the Thai baht down nearly 0.5% and leading losses. The dollar index was up 0.2% at 104.3, having recovered from its weakest level in four months hit earlier in the week.
Meanwhile, the benchmark Indian equity index Nifty 50 dropped more than 1% on Friday.
While a widespread IT outage impacted trading in oil, stocks, currencies and bonds globally on Friday, volatility was largely contained in the foreign exchange markets.
Investors now await remarks from Federal Reserve policymakers later in the day and will also keep an eye on political developments in the United States amid growing odds of a second presidential term for Donald Trump.
“Remarks about greater confidence in the (U.S.) disinflation process could be mildly negative for the dollar,” ING Bank said in a note.
(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
Source Agencies
