MUMBAI, July 29 (Reuters): The Indian rupee fell to a record low on Monday, pressured by month-end corporate dollar demand, although likely intervention from the Reserve Bank of India helped avert further losses.
The rupee closed at 83.7275 against the US dollar, unchanged from its close on Friday, after hitting an all-time low of 83.74 earlier in the session.
Factors such as outflows from local equities, volatility in the Chinese yuan and tepid risk appetite have contributed to weakness in the rupee in recent sessions. The currency has hit all-time lows in five out of the last six trading sessions. The dollar index was up slightly at 104.5 while most Asian currencies gained between 0.1 per cent and 0.8 per cent.
The RBI likely sold dollars via state-run banks, in order to cap weakness in the rupee, traders said.
While the central bank has been intervening to support the rupee, the dollar sales have been "passive," suggesting that it wants depreciation to occur gradually instead of pushing the currency higher, a foreign exchange salesperson at a private bank said. Meanwhile, dollar-rupee forward premiums jumped, with the 1-year implied yield up 5 basis points (bps) at 1.83 per cent, its highest level since February, aided by the decline in US bond yields.
Rupee hits record low on month-end dollar demand
FE Team | Published: July 30, 2024 00:02:11
Rupee hits record low on month-end dollar demand
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