The rupee had been sniffing at 84 levels for more than two months, but did not cross it with regular interventions by the Reserve Bank.
The rupee remained under pressure throughout this month due to sustained outflows from local equities, with foreign investors pulling out about USD 8 billion over the last 10 sessions.
Traders attributed the fall in Monday to the weakness in Asian peers amid disappointment over China’s stimulus.
The dollar-rupee pair is likely to hover in an 83.95 – 84.20 range in the near-term and remains a sell-on uptick if it moves fast, a trader said.
Traders will also be keeping an eye on Brent crude prices, which were down at USD 78/barrel on Monday but have risen nearly 9 per cent so far in October amid concerns of wider Middle East conflict disrupting oil supplies.
Analysts are attributing the sudden fall in the rupee to a slew of factors including the central bank stepping in to contain rupee appreciation to support merchandise exports which has been in some trough for some time now, along with rising economic uncertainties due to the rising geopolitical tension in some parts of the world.
A stronger rupee can make exports more expensive in global markets, or less competitive. It also affects the balance of payments and could hurt sectors dependent on exports.
The Mint Road mandarins intervene in the foreign exchange market to contain volatility in the rupee in either manner.
Some of them are of the view that the rupee is part of a broader, gradual trend driven by global uncertainties rather than a sudden or alarming shift.
