Indian rupee rebounds amid dollar sell-off

The Indian rupee slightly strengthened against the US dollar on Wednesday, closing at 83.995, supported by interbank dollar sales after having spent the day locked in a narrow range just shy of its all-time low.

Throughout most of the trading day, the rupee hovered near its record low of 84.0750, primarily due to dollar demand from foreign banks. However, towards the end of the session, dollar sales picked up, helping the rupee appreciate slightly.

The benchmark Indian equity indexes, the BSE Sensex and Nifty 50, both closed lower for the day, extending their monthly decline to over 3 per cent.

The rupee weakened past 84 for the first-time last week due to outflows and high oil prices. However, it has been supported by regular interventions from the Reserve Bank of India, preventing sharper losses.

Asian currencies rose between 0.1 per cent and 0.5 per cent on the day, with the dollar index slightly lower at 103.2.

ING Bank noted the potential for increased dollar buying ahead of the closely contested US election, which could put further pressure on the rupee.

Meanwhile, India’s merchandise trade deficit narrowed to $20.78 billion in September, a significant improvement from the $29.65 billion deficit recorded in the previous month.

Attribution: Reuters

Subediting: Y.Yasser