MUMBAI, Oct 17 (Reuters) – The Indian rupee hovered close to a key level on Thursday as its Asian peers declined and local stocks remained under pressure in the backdrop of a foreign fund exodus.
The rupee was at 84.01 against the U.S. dollar as of 11:40 a.m. IST, a tad weaker than its close at 83.9950 in the previous session.
Asian currencies were down between 0.1% to 0.4% as the dollar hovered close to its highest level in 11 months, boosted by heightened odds of U.S. election victory for former President Donald Trump and near certainty of a 25-bps Federal Reserve rate cut next month.
Overseas investors have sold $8 billion worth of domestic stocks over October so far, the highest monthly outflow in over four years.
While price-action on Thursday may be lacklustre, the dollar-rupee pair remains a “buy on dips,” given the recent gains for the dollar and upcoming U.S. elections, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.
Meanwhile, inflows related to Hyundai Motor India’s IPO undershot market expectations, with traders pointing to muted overnight dollar-rupee swap rates that signalled muted inflows.
The “sentiment is slightly negative on equities,” which is likely to keep the rupee under pressure but declines below 84.08-84.10 are unlikely given the RBI’s firm defence of the currency near those levels, a trader at a foreign bank said.
Investors now await the European Central Bank’s policy decision due later in the day alongside U.S. retail sales and jobless claims data.
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Reporting by Jaspreet Kalra; Editing by Abinaya Vijayaraghavan
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