The rupee closed at 84.0725 against the U.S. dollar, a tad lower than its close at 84.0650 in the previous session.
Foreign banks were spotted bidding for dollars, likely on behalf of custodial clients, a trader at a private bank said.
But “pretty consistent” dollar offers from state-run banks helped limit weakness in the local currency, the trader said.
Foreign investors have pulled out more than $9 billion from local stocks so far this month on a net basis, surpassing the previous peak of $8.35 billion in March 2020.
Benchmark Indian equity indices ended the day slightly in the red and are down about 4% each over October so far. Asian currencies were down between 0.1% to nearly 1% while the dollar index ticked up to 103.7. The dollar index has risen nearly 3% in October, boosted by expectations of shallower rate cuts by the Federal Reserve alongside rising odds of a victory for Donald Trump in the upcoming U.S. presidential election.
“FX markets seem to be positioning for a Trump victory in next month’s U.S. presidential election,” ING Bank said in a note.
Investors await remarks from Federal Reserve policymakers later in the day for cues on the future path of policy rates.
Dollar-rupee forward premiums rose with the 1-year implied yield rising 5 basis points to 2.24% after RBI chief Shaktikanta Das’s comments prompted traders to reassess the likelihood of a December rate cut.
