MUMBAI: The rupee ended at a new closing low of 84.86 against the US dollar down nearly seven paise from its previous close of 84.79. The rupee had hit a new low of 84.88 in intraday trade on Thursday but had recovered on Friday following a recovery in the equity markets.
Monday’s weakening was largely on the back of global cues with a weaker Chinese Yuan and rising US bond yields. A weaker Yuan also pushes down the rupee because of trade pressures while rising bond yields reverses capital flows from emerging markets to the US.
The Chinese Yuan came under pressure following a drop in retail sales which came on the back of China’s Central Bank stating that it may reserve cash reserve requirements further – a move that could put pressure on the exchange rate.
The dollar index remained steady at 106.88, with market participants eagerly awaiting the US Federal Reserve’s interest rate decision on Wednesday. The Fed is expected to cut rates by 25 basis points on Wednesday, however dealers are expecting the future guidance to be uncertain following the incoming President-elect Donald Trump’s administration’s stand on tariffs.
Despite the recent bout of depreciation, the domestic currency was an outperformer when compared to several of its Asian peers the government said in response to a parliament query last week.