MUMBAI: The Indian rupee closed at an all-time low on Friday, pressured by strong dollar demand from local oil companies, likely related to month-end payments.
The rupee closed at 83.7275 against the US dollar, compared to its previous close of 83.6975. The currency was down about 0.1% week-on-week, extending its losing streak to the fourth straight week.
Volatility in the Chinese yuan, outflows from local equities following a hike in capital gains taxes on equities in the budget, and tepid risk appetite hurt the rupee this week, dragging it to record lows for four out of five trading sessions.
Given the recent a price action, a “buy on dips” bias is likely to persist on the dollar-rupee pair, a foreign exchange trader at a large private bank said. The trader expects the rupee to weaken to 83.80 over the next week.
Oil companies were “quite active on bid (on USD/INR),” but mild offers from state run banks were also present, a trader at a private bank said.
The dollar index was steady near 104.3. Asian currencies were mixed, with the yuan declining 0.3% while the Thai baht and Philippine peso gained. Investors now await the release of US personal consumption expenditure (PCE) price index data.
Economists polled by Reuters forecast that the core PCE, was unchanged at 0.1% month-on-month in June. “As we stand, (US) inflation still needs to show more signs of moderation. If it doesn’t, the markets may have to re-adjust their pricing of the pace of further rate cuts,” analysts at Societe Generale said in a note.
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