MUMBAI: The Indian rupee weakened to its all-time low on Thursday, pressured by likely foreign outflows from local stocks and renewed strength in the dollar as investors tempered hopes of aggressive rate cuts by the US Federal Reserve.
The rupee declined to a low of 84.4275 in early trading, eclipsing its previous all-time low of 84.42.
It was quoted at 84.4175 as of 10:30 a.m. IST, nearly flat on the day.
Likely intervention by the Reserve Bank of India helped the currency limit its losses, with traders citing strong dollar offers from state-run banks.
Benchmark Indian equity indexes, the BSE Sensex and Nifty 50 were down about 0.7% each.
Indian equities were pressured by sharp declines in the shares of Adani Group’s listed entities after its billionaire chairman was indicted in New York over his involvement in an alleged multibillion-dollar bribery and fraud scheme.
Shares of the group’s listed entities were down across the board, with the flagship firm Adani Enterprises slumping 20% and Adani Green shedding 18%.
Meanwhile, the dollar’s recovery on Wednesday following a three-day losing streak also kept the rupee on the defensive.
The dollar index was at 106.5 after rising 0.4% on Wednesday, while the rupee’s Asian peers were mostly rangebound.
Cautious remarks from Fed officials dented expectations of aggressive rate cuts.
Indian rupee holds ground against dollar
Fed Governor Michelle Bowman on Wednesday expressed discomfort with the central bank cutting interest rates while inflation continues to run above its target.
Odds of a December rate cut by the Fed have declined to 52% from 82% a week earlier, according to CME’s FedWatch tool.
Heightened geopolitical risks triggered by the Ukraine-Russia conflict also supported the greenback.
“Markets need to monitor the dangerous escalation in the Ukraine-Russia war, now driven by increased military engagements from both sides, strategic policy shifts, and heightened international involvement,” DBS Bank said in a note.
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