The rupee closed at 84.3775 against the dollar, compared to its previous closing level of 84.3925.
The currency lingered in an under-3 paisa band through the session after having dipped to its all-time low of 84.4125 on Tuesday.
Foreign banks were spotted bidding for dollars, likely on behalf of custodial clients, while state-run banks were on offer “pretty much through the session,” a trader at a foreign bank said.
India’s benchmark indexes BSE Sensex and Nifty 50 also closed lower by over 1% each. The Nifty slipped into correction territory, having declined over 10% from a record high hit in late-September.
Sustained outflows from local stocks, to the tune of about $14 billion since October, have weighed on local stocks and kept the rupee under pressure. However, routine interventions by the Reserve Bank of India via state-run banks have supported the rupee in face of the outflows and a rally in the dollar since the U.S. election. The dollar index and was last quoted at 105.9, while Asian currencies were mostly stronger as investors awaited U.S. inflation data due later in the day.
Economists polled by Reuters expect the U.S. inflation data to show that month-on-month core CPI was steady at 0.3% in October.
“The strong dollar is currently pricing in a good deal of Trump’s policy mix, and data releases/dovish Fed comments might offer good opportunities to take profit in bullish dollar positions,” ING Bank said in a note.
