MUMBAI: The Indian rupee closed at its weakest closing level on record for the eighth consecutive session on Thursday, as a widened arbitrage between the non-deliverable and outright forwards market added to the currency’s troubles.
The rupee closed at 85.7525 against the US dollar, down 0.1% on the day.
While the rupee hit a low of 85.79 during the session, it avoided deeper losses on the back likely dollar-selling intervention by the Reserve Bank of India, traders said.
While state-run banks were spotted offering dollars earlier in the session as well, traders said the offers were amplified near 85.78-85.79 levels. The RBI had intervened strongly near these levels last week as well when the rupee slumped to an all-time low of 85.8075.
On the day, gains in most Asian currencies were of little help to the rupee in the face of heightened dollar demand driven by banks exploiting arbitrage opportunities between the NDF and onshore over-the-counter (OTC) markets.
The widened gap between NDF and outright forwards also sparked a surge in dollar-rupee forward premiums with the 1-year implied yield touching its highest level since October 2022.
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