The Indian rupee experienced a slight depreciation on Wednesday, mirroring the downward trend in most Asian currencies. However, the rupee managed to maintain its position above its all-time low, supported by intermittent dollar sales from state-run banks. Closing at 83.9525 against the US dollar, the rupee exhibited a marginal decline compared to its previous day's closing of 83.9250. Despite touching an intraday low of 83.9675, the currency remained above its record low, bolstered by "intermittent offers (on USD/INR)" from state-run banks, according to a senior trader at a foreign bank. The Reserve Bank of India (RBI) has been actively intervening in the foreign exchange market throughout August, preventing the rupee from falling below the psychologically significant 84 level. The currency has been caught between strong dollar demand from importers, tepid portfolio flows, and the RBI's efforts to stabilize the exchange rate. Overseas investors have net sold $1.3 billion of Indian stocks this month, following significant inflows of nearly $7 billion in the previous two months. Amit Pabari, managing director at FX advisory firm CR Forex, noted that the rupee has followed a consistent pattern in recent sessions, opening strong but subsequently losing ground as dollar buying intensifies. The dollar index rose 0.2 per cent to 100.8 on Wednesday, while most Asian currencies, including the Korean won, declined. However, traders anticipate some respite for the rupee later this week, supported by expected inflows of up to $3 billion related to changes in the MSCI index. The upcoming release of US personal consumption expenditure (PCE) inflation data on Friday is a key global event this week. Investors will closely watch this data to assess the likelihood of a 25 or 50 basis point rate cut by the Federal Reserve at its September meeting. Attribution: Reuters Subediting: Y.Yasser
