By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee was nearly unchanged on Tuesday as likely intervention by the central bank helped the currency hold above its record low amid uncertainty about the U.S. elections and possible equity outflows.
The rupee was unchanged at 84.1150 as of 09:55 a.m. IST and held just shy of its all-time low of 84.1225 hit on Monday.
While non-deliverable forwards (NDF) had signalled the currency may dip to its record low in early trading on Tuesday, the Reserve Bank of India likely intervened via state-run banks to support it, traders said.
Persistent outflows from local stocks have maintained pressure on the rupee with foreign investors pulling out about $1 billion from equities in November so far, adding to the $11 billion of outflows in the previous month.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50 down 0.2% each on the day and have declined about 8% each from their record-highs hit in late September, nearing correction territory.
Uncertainty over the result of the impending U.S. elections, which polls suggest is virtually a coin toss, has compounded the pressure.
The United States heads to the polls later on Tuesday and early result trends are expected to show up Wednesday morning in Asia.
A victory for Republican candidate Donald Trump could lead to a weaker Chinese yuan with “spillover effects on regional currencies,” MUFG Bank said in a note.
The offshore Chinese yuan was down 0.1% on the day at 7.10 amid mixed price action in Asian currencies. The dollar index was slightly weaker at 103.9, after declining nearly 0.4% on Monday.
The Reserve Bank of India is well-equipped to deal with heightened volatility related to the outcome of the U.S. presidential election, two sources familiar with the bank’s thinking told Reuters last week.
(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
