India rupee hits over 2-month low on outflows, RBI likely intervenes
The Indian rupee fell to its weakest level in more than two months at 96.43 per dollar, with traders citing persistent foreign selling of local assets and likely central bank intervention to prevent it from nearing a record low.
(Updates post market open) By Jaspreet Kalra MUMBAI, Oct 6 (Reuters) — The Indian rupee declined to its weakest level in more than two months on Tuesday under pressure from persistent foreign selling of local assets, drawing likely central bank intervention as the South Asian unit nears a record low. 43 per dollar, its weakest level since July, before paring losses slightly. 96 in May. Traders reckon that the central bank, despite its almost daily interventions through dollar sales that helped anchor the local currency, is unlikely to fight the tide indefinitely.
"While the FX intervention response has been strong, the central bank will prefer to time dollar sales to rationalise the use of the reserves buffer and prevent widening the ballooned short FX forward book," DBS said in a note. One-off policy measures have helped boost India's FX reserves by drawing over $140 billion in capital inflows. Absorbed via swaps by the central bank, the inflows show up as a forward liability and contributed to expanding the net size to about $200 billion by the end of August. The focus is also on the central bank's policy decision due on Wednesday, where a 25 basis point hike is widely anticipated.
50 over the next 12 months. 70 on Tuesday. None of the polled analysts expected the rupee to pass the psychologically key 100-a-dollar mark over the next year, with BofA, UOB and Barclays forecasting it at 99 per dollar by end-September 2027. com)