The Indian rupee remained near its record low against the US dollar on Monday, mirroring weakness in most other Asian currencies. However, intervention by state-run banks prevented a further decline. The rupee traded flat at 83.6525 against the dollar by 9:40 AM IST, barely budging from its previous close of 83.6625. The currency had hit an all-time low of 83.6660 on June 20th. Broader weakness in Asian currencies added pressure. The Thai baht led the decline, falling 0.5 per cent, while the offshore Chinese yuan also depreciated past 7.29 after China's central bank unexpectedly cut interest rates. The rupee "is unlikely to weaken past 83.75 even if it does make an all-time low today," a foreign exchange trader at a state-run bank said. This suggests the Reserve Bank of India (RBI) might step in to prevent a steeper fall. Meanwhile, the dollar index edged slightly higher to 104.3, while US bond yields remained mostly unchanged following President Biden's withdrawal from the presidential race. On a brighter note, India's foreign exchange reserves reached a record high of $666.85 billion in the week ending July 12th, reflecting a $9.7 billion increase. Analysts like Amit Pabari, managing director at FX advisory firm CR Forex, believe this indicates the RBI's efforts to prevent rupee appreciation despite significant inflows into the Indian stock and debt markets. Net foreign investment in Indian equities and debt has already reached nearly $5 billion so far in July, according to stock depository data. Investors now turn their attention to Tuesday's Indian budget announcement, particularly the government's plans regarding the fiscal deficit target and projected gross market borrowing. Attribution: Reuters
