MUMBAI: The Indian rupee was slightly weaker on Thursday, tracking a decline in Asian peers, as the dollar index climbed to its highest level in a year amid ongoing momentum following Donald Trump’s victory in the US elections.
The rupee was at 84.4025 per US dollar as of 11:00 a.m. IST, down from its close at 84.3775 in the previous session.
Asian currencies were weaker by 0.1% to 0.9% while the dollar index was up 0.2% at 106.7, hovering close to its highest level in a year.
The outcome of elections in the world’s largest economy has boosted the dollar and US bond yields, hurting emerging market currencies.
The post-election market volatility in global markets has also prompted the Reserve Bank of India to keep a closer than usual eye on banks’ speculative trading activity, six bankers told Reuters.
The bankers requested anonymity as they are not authorised to speak to the media. “They (RBI officials) call more frequently enquire about all things.. the position, what client are you buying for, what are your expected flows,” a senior treasury official at a large public sector bank said.
The Indian central bank did not respond to a Reuters’ email seeking comment.
The central bank’s routine interventions and market vigilance have helped the rupee fare better than its regional peers.
In the past, when the rupee faced headwinds, the RBI responded by asking banks to avoid arbitrage activity and not make short speculative bets on the currency.
The offshore Chinese yuan has slumped nearly 1.5% and Thai baht is down 2.7% in November so far, while the rupee is down only 0.4% in the same period.
“We think Asian FX weakness still has legs, with tariff hikes likely to be in the pipeline,” MUFG Bank said in a note, referring to the trade tariffs floated by Trump during his election campaign.
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