MUMBAI: The Indian rupee closed at its weakest level on record on Monday pressured by likely outflows from local equities and the unwinding of carry trades as fears of an economic slowdown in the United States roiled markets.
The rupee ended at its all-time low of 83.8450, down 0.1% from its close at 83.8025 in the previous session.
Benchmark Indian equity indices, the BSE Sensex and the Nifty 50, closed lower by about 2.7% each, their worst single day decline in over two months.
Aggressive dollar bids from foreign banks, likely on behalf of custodial clients, pressured the rupee through the day’s session, a foreign exchange trader at a state-run bank said.
But intervention from the Reserve Bank of India helped limit the rupee’s losses, traders said.
The RBI “for now is protecting (the rupee) near 83.85 levels but it’s quite likely that it moves to 84 this week if the pressure continues,” a trader at a foreign bank said.
The dollar index fell about 0.5% to 102.6, its lowest since March, while Asian currencies were up 0.1% to 1.7% with the offshore Chinese yuan touching its strongest level since January.
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