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MUMBAI: The Indian rupee was a tad stronger on Wednesday, supported by gains in the Chinese yuan and on dwindling pressure from foreign portfolio outflows, which have been a persistent pain point for the domestic currency over the last two months.

The rupee was at 84.6475 as of 10:45 a.m. IST, compared with its close at 84.6850 in the previous session.

The currency declined to its all-time low of 84.7575 on Tuesday, pressured by strong bids for the US dollar in the non-deliverable forwards (NDF) market and weakness in the Chinese currency, prompting the Reserve Bank of India (RBI) to intervene.

On Wednesday, dollar bids in the NDF market were lighter and foreign banks were spotted offering dollars, which gave the rupee some breathing room, a trader at a state-run banks said.

Indian rupee likely to hit new lifetime low at open on Chinese yuan-led slide in Asia

Foreign institutional investors turned net buyers of Indian equities on Tuesday, pouring in about $430 million after three sessions of selling.

The offshore Chinese yuan rose about 0.1% to 7.29 on Wednesday, after hitting a one-year low in the previous session, while other Asian currencies were mixed. The dollar index rose 0.1% to 106.4.

“With the Federal Reserve leaning towards a December rate cut alongside slowing FII (foreign institutional investor) outflows and the RBI’s vigilance, the rupee is unlikely to breach the 85 level,” Amit Pabari, managing director at FX advisory firm CR Forex, said.

Investors are currently pricing in a near 73% chance of a US rate reduction this month, up from 61% a day earlier, according to the CME’s FedWatch tool.

US labour market data later in the day, alongside remarks from Fed Chair Jerome Powell will be parsed for cues on the future path of policy rates.

Meanwhile, the RBI will kick off its December monetary policy meeting on Wednesday, with a decision expected on Friday amid some anticipation of policy easing following weak September-quarter economic data.

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