Indian Rupee Stays Close to 84 Against Dollar Amid Weakening Peers and Tepid Local Equities

Indian Rupee Stays Close to 84 Against Dollar Amid Weakening Peers and Tepid Local Equities

The Indian rupee traded near the critical threshold of 84 against the US dollar on Thursday as Asian currencies weakened and local stock indices faced pressure due to a significant outflow of foreign funds. As of 11:40 a.m. IST the rupee stood at 84.01 against the dollar reflecting a slight decline from its previous close of 83.9950.

The decline in the rupee coincided with a broader downturn in Asian currencies which fell between 0.1% to 0.4% as the US dollar remained near its highest level in 11 months. This strength of the dollar is attributed to the increased likelihood of former President Donald Trump winning the upcoming US elections and the almost certain anticipation of a 25-basis-point rate cut by the Federal Reserve next month.

In the domestic market benchmark equity indices experienced declines with the BSE Sensex falling by 0.3% and the Nifty 50 dropping by 0.5%. This downturn was particularly influenced by a sharp drop in Bajaj Auto shares along with continued selling by foreign investors in local stocks. So far in October overseas investors have offloaded $8 billion worth of domestic stocks marking the highest monthly outflow in over four years.

Despite the lackluster price action on Thursday analysts suggest that the dollar-rupee pair could be viewed as a "buy on dips." Dilip Parmar a foreign exchange research analyst at HDFC Securities emphasized that the recent gains in the dollar along with the developments surrounding the US elections could support this view.

The ongoing volatility in the currency and equity markets underscores the complexities facing the Indian economy as it navigates through external pressures and internal challenges. Investors will be keeping a close watch on these developments as they assess the potential impact on the rupee and the broader financial landscape in the coming days.