Due to ongoing stock market withdrawals and concerns about the outcome of the U.S. election next week, the Indian rupee fell to a record low vs the dollar on Thursday. Inching past the all-time low of 84.0900, the rupee fell to a record low of 84.0925 to the US dollar.
“The dollar has a strong bid, although it appears that the previous sessions are repeating themselves. According to a trader from a private bank, the Reserve Bank of India (RBI) is unlikely to relax its control over the rupee and is anticipated to maintain it within a narrow range.
“Today, they (RBI) are also active.”
The rupee has outperformed its main Asian peers and its decline has been contained thanks to the RBI’s unrelenting intervention.
To guarantee a controlled depreciation of the rupee, the central bank has sold dollars on nearly every day for the past two weeks.
When compared to other Asian currencies, the rupee’s one-month volatility is less than 1%.
If Republican nominee Donald Trump wins next week, the dollar index is anticipated to rise, U.S. Treasury yields will rise, and Asian currencies would be depreciated.
The constant foreign withdrawals from Indian stocks this month due to comparatively high valuations and China’s stimulus measures are further straining the local currency.
On a net basis, foreign investors withdrew around $11 billion from Indian stocks in October, a dramatic reversal from the $7 billion inflows in September. This month’s 6.2% decline in the Nifty 50 index is the index’s worst monthly performance since March 2020, when COVID-related lockdown limitations were implemented.
