MUMBAI: The Indian rupee weakened to its lowest level on record on Friday before ending higher as the central bank’s intervention supported the currency in the face of the US dollar jumping to a two-year high.

The rupee weakened to a low of 84.5075 against the US dollar before closing at 84.4450, up 0.06% on the day. The currency was marginally lower week-on-week.

The dollar index climbed to a peak of 108.09 on Friday, its highest since November 2022, before paring gains to last quote up 0.5% at 107.69. The greenback was boosted by weakness in the euro and British pound following weak economic data for Germany and the UK.

The rupee, meanwhile, faced some pressure but managed to hold its ground, supported by the Reserve Bank of India’s (RBI) dollar-selling interventions and its instructions to some banks to cut speculative bets against the local currency, Reuters reported earlier.

In addition to telling lenders to reduce speculative bets, the RBI has also asked them to avoid buying spot dollars to execute arbitrage trades.

“The RBI will mostly be okay with a gradual depreciation of the rupee and will continue with their intervention. We expect the rupee to fall to 85 to the dollar by December-end,” Anshul Chandak, head of treasury at RBL Bank, said.

The rupee has weakened nearly 0.5% so far in November, hurt by overseas investors pulling out over $4 billion from local equities and debt and as the dollar rallied following Donald Trump’s election victory on Nov. 5.

Analysts reckon that the President-elect’s policies could reignite inflation in the US and temper future rate cuts by the Federal Reserve.

The Indian currency has outperformed its regional peers this month. Other Asian currencies have declined 0.9% to 2.2% so far in November.

The RBI’s routine interventions have helped the rupee weather the negative cues, traders said. Asian currencies were mostly weaker on the day, with the Korean won down 0.3% and leading losses.