MUMBAI: The Indian rupee dropped to an all-time low on Monday, weighed down by persistent dollar demand from foreign banks, likely for their custodial clients.
The rupee dipped to a lifetime low of 84.0725 to the US dollar, inching past the prior low of 84.07 hit on Friday.
The local currency’s drop past 84 came after it spent more than two months near that level, supported by regular interventions by the Reserve Bank of India (RBI).
The rupee has remained under pressure this month due to sustained outflows from local equities, with foreign investors pulling out about $8 billion over the last 10 sessions.
On Monday, the weakness in Asian peers amid disappointment over China stimulus also weighed on the rupee, traders said. Asian currencies were mostly lower by 0.1% to 0.3% while the dollar index was at 103, hovering close to its two-month peak.
Local private and state-run banks were spotted offering dollars while large foreign banks dominated dollar bids, a trader at a foreign bank said.
The dollar-rupee pair is likely to hover in a “83.95-84.20 range in the near-term (and) remains a sell on uptick if it moves fast”, the trader said.
The RBI’s defense of the currency alongside a potential easing of equity outflows may offer some relief to the rupee and help it rise above 84, Amit Pabari, managing director at FX advisory firm CR Forex, said.
Traders will also be keeping an eye on Brent crude oil prices, which were down at $78 per barrel on Monday but have risen nearly 9% so far in October amid concerns of wider Middle East conflict disrupting oil supplies.
Meanwhile, Federal Reserve Governor Christopher Waller is slated to speak later in the day and may offer cues on the future path of US policy rates.
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