Rupee weakens to 86.02 amid equity outflows and Central Bank review
Mumbai: The
Indian rupee
weakened to 86.02 per dollar on Wednesday, before closing marginally higher at 85.90/$1, largely driven by equity outflows and squaring of offshore non deliverable forwards (NDF) positions ahead of the central bank's
monetary policy review
on Friday, traders said.
The rupee had opened at 85.74/$1 on Wednesday.
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Dollar demand from foreign banks and oil companies added to the pressure. The rupee had closed at 85.59 on Tuesday.
Likely intervention by the
Reserve Bank of India
helped contain excess losses and prevented the rupee from depreciating too far from the 86 level, traders said. The currency has declined 1.5% since last Monday, where it closed at 84.78/$1 and is the worst performing currency in Asia, according to LSEG data.
"Interest rate differentials between India and US are shrinking, and with the US not expected to cut, rupees' spot rates are weakening," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
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For the rupee, a key resistance now remains at 86.25/$1, from an earlier resistance of 85.80/$1. Traders are also betting against the rupee by cutting down on their long rupee positions.
"There has been some unwinding of long rupee positions amid tariff uncertainties," said Kunal Sodhani, head of treasury at Shinhan Bank India.
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