By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee hit a record low on Tuesday, influenced by weak regional currencies and capital outflows from local stocks. However, the Reserve Bank of India’s intervention helped limit its fall.
The rupee ended slightly lower at 84.0775 against the U.S. dollar, its lowest closing ever, after reaching an intraday low of 84.0825.
Asian currencies dropped between 0.1% and 0.4%, while the dollar index remained strong at 103.9, near a two-month high.
Rising expectations for less aggressive U.S. rate cuts and potential re-election of Donald Trump have boosted the dollar and U.S. bond yields recently.
The 10-year U.S. Treasury yield climbed to 4.20%, close to a three-month high, while the dollar index experienced a more than 3% rise this month.
ING Bank noted that increasing dollar demand could be linked to capital outflows ahead of the contentious U.S. elections.
Traders reported that foreign capital outflows from Indian stocks approached $10 billion in October, setting the stage for a record monthly outflow.
Indian stock indices, BSE Sensex and Nifty 50, dropped more than 1% each on the same day.
Despite the challenges, the rupee has performed relatively better than regional currencies this month due to central bank interventions, with state-run banks actively selling dollars likely for the RBI.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala and Savio D’Souza)
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