The Indian rupee slipped on Wednesday as investors took cues from local stocks that fell nearly 1 percent, and trimmed holdings in relatively risky assets like the local unit on an uncertain outlook for global rates.
Dealers said that the Reserve Bank of India (RBI) was seen buying dollars minutes before the market closed, in a bid to further weaken the rupee. The rupee ended at 40.96/97 per dollar, easing from Tuesday's 40.7475/77575, but rising off an intraday low of 41.08.
"It's hard to put a finger on what's driving it, but sentiment has changed for the worse across Asia, and the rupee is reflecting that," said the chief dealer with a corporate. Dealers said the dollar's strength has spurred them unwind short positions in the US currency, as did the easing of capital flows into the record $2.4 billion IPO by DLF Ltd that closes on Thursday.
The rupee was further weighed down after the central bank was suspected of having bought dollars in late trade. The RBI bought $2.06 billion in intervention in April, data showed on Monday, taking the total to $24 billion for the six months from November.