The Indian rupee closed at a fresh low of 84.96 against the US dollar on Wednesday, weighed down by dollar demand from foreign banks and importers ahead of the US Federal Reserve meeting outcome, as per dealers.
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Muted domestic equities, foreign fund outflows, and cautious market sentiment further pressured the rupee. The Reserve Bank of India (RBI) intervened through state-run banks, selling dollars to limit volatility and curb further depreciation of the local currency.
The rupee, which settled at 84.90 per dollar on Tuesday, breached the crucial 84 per dollar mark earlier on October 11 this year. The domestic currency has gradually depreciated over 475 days, reflecting global and domestic trends.
RBI’s intervention strategy includes conducting mid-tenor Buy-Sell Swaps to manage foreign exchange reserves effectively. The central bank reiterates its stance of intervening only to curb undue volatility rather than targeting specific currency levels.
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The rupee has depreciated by 1.99% in the calendar year 2024, with a 0.48% decline in the current month. Traders suggest that the rupee could cross the 85 per dollar mark if the Federal Reserve maintains a hawkish tone in its commentary.
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