India's central bank likely sold dollars to support the rupee after the local currency hit an all-time low on Tuesday, pressured by a decline in Asian currencies led by the Chinese yuan, four traders told Reuters.
The rupee weakened to 84.40 per dollar in early trade, eclipsing its previous high of 84.3925 hit in the previous session. The currency remained stable at 84.3925.
State banks were spotted offering dollars near the 84.40 levels, likely on behalf of the Reserve Bank of India, said the traders, who declined to be named as they are not authorized to speak to the media.
The dollar index was up 0.1% at 105.6, close to its four-month high reached Monday. Asian currencies were down 0.1% to 0.6% as the Chinese yuan weakened to its lowest level in more than three months.
The RBI is “likely to defend 84.40 in the short term, but it (USD/INR) is expected to gradually rise to 84.50,” said a trader at a mid-sized private bank.
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