Indian rupee touches record low of 83.40 against US dollar
On November 30, the Indian rupee hit a record low, closing at 83.3950 against the US dollar. The rupee's slight 0.1% monthly loss was kept in check by the Reserve Bank of India's (RBI) intervention, according to traders. Anindya Banerjee, head of foreign exchange research at Kotak Securities, told BusinessLine that the rupee's downward trend in a tight range is expected to continue for the time being.
RBI's mild intervention and dollar demand
The RBI reportedly sold dollars "mildly," while a large foreign bank purchased them, possibly on behalf of custodial clients. Although most Asian currencies rose in November due to lower US yields and a weaker dollar, the rupee remained stagnant as strong local demand for the greenback offset positive global factors. ING Bank mentioned in a note that "the room for a dollar rebound has shrunk based on pure rate fundamentals."
US yields slump and dollar index decline
Throughout November, US yields dropped significantly, with the 10-year yield falling nearly 60 basis points. This decline is attributed to investors' belief that the US Federal Reserve may start lowering rates as early as May next year. The dollar index, which measures the greenback's strength against six other currencies, was last quoted at 103.14 but is on track for a monthly decline of over 3%, its steepest drop in a year.
Investors await India's GDP and US inflation data
Investors now eagerly await India's third-quarter GDP figures and US inflation data for October, both set to be released later in the day. Meanwhile, rising oil prices continue to put pressure on the rupee. Brent crude futures climbed 1.0% to $83.93 a barrel, and US West Texas Intermediate (WTI) crude futures increased 0.96% to $78.61 a barrel. Crude oil prices increased for three straight days ahead of an OPEC meeting set to announce new supply cuts for the upcoming year.
