Rupee flat, wedged between outflows and state-run banks’ offers

The Indian rupee was nearly unchanged on Monday as pressure on account of outflows was blunted by dollar offers from state-run banks, with traders expecting the Reserve Bank of India (RBI) to defend the currency against sharp declines.

The rupee was at 84.07 against the US dollar as of 10:30 am IST, compared to its close at 84.0650 in the previous session.

The local unit declined to its all-time low of 84.0775 on Friday, but its losses were contained on account of intervention by the RBI.

The rupee has remained under pressure through much of October due to a sharp pickup in outflows from local stocks and elevated oil prices earlier this month.

While oil prices have since cooled, foreign outflows from local stocks are on track for a record monthly high, having touched $9.2 billion in October so far.

Despite the sharp upswing in outflows, the rupee has outperformed most of its Asian peers this month as routine central bank interventions have prevented sharp losses.

On Monday, state-run banks were spotted offering dollars near 84.07 levels, most likely on behalf of the RBI, a trader at a foreign bank said.

The rupee is likely to stay under pressure through much of the session but it is unlikely that the RBI will let it weaken below 84.10, the trader added.

The RBI’s interventions are “evident from the significant drop in (FX) reserves,” Amit Pabari, managing director at FX advisory firm CR forex, said.

India’s foreign exchange reserves dropped to a one-month low of $690.43 billion as of Oct. 11, central bank data showed.

Asian currencies and the dollar index were largely rangebound, while US bond yields were a tad higher during Asia trade.