The Indian rupee dipped to an all-time low on Monday, as the continuous outflow from local stocks eased the impact of a weaker dollar. The news agency Reuters reported that the rupee closed at 84.1150 against the U.S. dollar after touching the forever low of 84.1225 earlier in the market session.
The Indian stock market indices, BSE Sensex and Nifty 50, also fell more than 1 percent on Monday.
The dollar index was down 0.2 percent on Monday at 103.7, while most Asian currencies rose. The offshore Chinese Yuan reached a three-week high of 7.08, according to the report.
The US dollar was likely weighed down by unwinding long positions in the lead-up to US elections. “A Republican clean sweep can send the dollar higher, but probably by less than how much a Harris win could hit USD. The dollar might not rally at all if Trump wins but Democrats secure the (U.S. House of Representatives),” said ING Bank in a note.
RBI's intervention
Intervention from the Reserve Bank of India, like on Monday, has helped the rupee avoid a sharp decline despite pressure from outflows from domestic stocks and higher US bond yields, according to the report.
The central bank is well geared up to deal with the rise in market volatility and pressure on the Indian rupee if Donald Trump, the Republican candidate, wins the U.S. presidential election, two people aware of the development told the news agency last week.
Market investors are also preparing for some uncertainty as the winner of the U.S. presidential election may not be known for days after voting ends.
(By arrangement with livemint.com)