The rupee dropped to an all-time low of 84.0850 to the dollar, slipping past the 84.0825 low it hit last week. Most Asian currencies were weaker on the day in the wake of a further rise in U.S. yields.
The U.S. dollar and yields have been pushing higher on the back of rising odds of Donald Trump winning the presidential election and as data indicated the U.S. economy remains healthy.
The dollar index inched past 104.50 on Monday.
The Reserve Bank of India (RBI) likely sold dollar via public sector banks to support the local currency, like it has done multiple times over recent days, traders said.
If it were not for the RBI, the rupee’s losses would have been bigger, according to traders. The central bank’s constant intervention has stamped out volatility in the rupee, which traded in a three-paisa range last week, the narrowest weekly range in at least 10 years, according to LSEG data. “The price action in spot (market) is solely dependent on the level that the RBI is comfortable with,” a trader with a private bank said.
“Even if the rupee hits a fresh low, the expectation is that the currency will be brought back in this very narrow range. It’s a lacklustre market.”
