By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee hovered close to its lifetime low on Friday as sustained foreign outflows from domestic stocks kept the currency under pressure, with benchmark Indian equity indexes headed for the fourth weekly decline on the trot.
The rupee was at 84.07 against the U.S. dollar as of 10:45 a.m. IST, nearly unchanged from its close at 84.0775 in the previous session.
The local currency had declined to its all-time low of 84.0825 earlier this week but managed to avoid deeper losses, supported by the Reserve Bank of India’s (RBI) intervention.
The rupee has been pressured by a surge in outflows from local stocks alongside in a rise in U.S. bond yields and the dollar index this month.
While foreign investors have net sold over $9.5 billion of Indian stocks in October so far, the dollar index has risen more than 3% and the 10-year U.S. bond yield touched a near three-month peak before retreating on Thursday.
“The resilient U.S. economy and Trump’s trade are supporting the respective upward marches,” DBS Bank said in a note, referring to market positioning ahead of the outcome of the closely contested U.S. presidential election.
Benchmark Indian equity indexes, the BSE Sensex and the Nifty 50 were down 0.6% and 0.9%, respectively, on the day, set for their fourth consecutive weekly decline.
State-run banks were “mildly on offer (on USD/INR),” which should keep the pair in a narrow range through the day, a trader at a foreign bank said.
With the RBI “making its intent clear” through routine interventions, the rupee is unlikely to stray out of the 84-84.15 band ahead of the U.S. elections, the trader added.
Asian currencies declined by 0.1% to 0.7% on Friday, while the dollar index was steady at 104.6.
Investors now await key U.S. inflation and employment data, due next week, for cues on the future path of U.S. policy rates.
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema)
