The Indian rupee hit an all-time low on Wednesday, pressured by strong dollar demand from importers and likely outflows from local stocks, while intervention by the Reserve Bank of India curbed losses , according to traders.
The rupee fell to 84.9550 against the US dollar before closing at 84.9525, down 0.07 per cent.
Weakness in regional currencies in the run-up to the US Federal Reserve’s decision expected in US trading hours also penalized the rupee with speculative bids on the dollar amid a persistent downward trend on the unit. local.
India’s benchmark stock indices BSE Sensex and Nifty 50 ended down around 0.6% each.
Concerns over India’s growth prospects have kept the rupee under pressure, alongside a well-supported dollar following Donald Trump’s election victory.
The Dollar Index was last at 106.7, and has risen more than 3% since the November 5 election.
Despite the pressures, the rupee has performed better than most of its regional peers since then, thanks to regular interventions by the Reserve Bank of India.
The local unit is down 0.9%, while its peers lost between 1.8% and 4.4%.
The RBI likely sold dollars and conducted dollar-rupee buy/sell swaps on Wednesday as well, as part of its measures to support the currency.
The central bank has supplemented spot market intervention with dollar-rupee buy/sell swaps in recent sessions, likely in a bid to avoid the impact of spot dollar sales on currency reserves. global exchange rates and INR liquidity, traders said.
Overall, investors were watching for any change in Fed policymakers’ forecasts for rate cuts in 2025 from September’s forecast, with a 25 basis point cut fully priced for this meeting.
“Expectations for the latest Fed meeting are well-entrenched: a 25 basis point cut to 4.25%-4.50%, meaning a possible pause in January and fewer cuts in 2025/26,” Societe Generale said in a note.
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