The Indian rupee ended the trading session on a stronger note, supported by broad-based interbank dollar sales. The Indian rupee closed at 83.9950 against the U.S. dollar on Wednesday, an improvement from the previous close of 84.0375, despite spending most of the day hovering near its all-time low.
The rupee remained within the range of 84.04-84.05 throughout the session, just shy of the record low of 84.0750 recorded on Monday. Traders noted that demand for dollars from foreign banks, likely on behalf of custodial clients, countered some positive effects from declining oil prices and gains in other Asian currencies.
Towards the end of the session, increased dollar sales and banks’ reluctance to hold long positions on the dollar-rupee pair helped the rupee make a slight recovery. The BSE Sensex and Nifty 50 indices, however, closed lower, reflecting a decline of over 3% for the month.
Foreign investors have sold approximately $8 billion worth of local stocks in October, as global fund managers shifted their focus to China, impacting investments in India. Last week, the rupee fell past the 84 mark for the first time, although it has avoided significant losses due to consistent interventions by the Reserve Bank of India.
Asian currencies showed a slight increase, ranging from 0.1% to 0.5%, while the dollar index dipped slightly to 103.2. Analysts at ING Bank highlighted the risk of market participants buying dollars as a hedge in anticipation of a closely contested U.S. election.
India's merchandise trade deficit narrowed to $20.78 billion in September, down from a ten-month high of $29.65 billion in August, indicating some improvement in trade conditions.
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The Indian rupee strengthens slightly supported by broad-based interbank dollar sales, closing at 83.9950 against the U.S. dollar.
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