On October 4, the Reserve Bank of India (RBI) took action in the foreign exchange market by selling dollars to prevent the Indian rupee from plummeting to an all-time low.
The rupee, facing challenges from increased US Treasury yields and a strengthened US dollar, concluded the day at 83.24 against the dollar, slightly weaker compared to the previous closing rate of 83.21. During the day, the domestic unit depreciated to 83.27 per dollar, just shy of the record intraday low of 83.29.
Dealers estimate that state-run banks, acting on behalf of the RBI, sold approximately $500 million to stabilise the situation.
Despite these challenges, a resilient domestic economic outlook has helped keep the Indian bond market afloat. On October 4, the yield on the benchmark 10-year government bond remained steady at 7.24%, matching the rate from the previous day. Nevertheless, India’s benchmark stock indices, Sensex and Nifty50, dropped to their lowest point in over a month due to widespread selling.
In comparison to other Asian currencies on October 4, the Indian rupee outperformed peers like the Indonesian rupiah, Malaysian ringgit, and Thai baht but lagged behind the Japanese yen, Taiwanese dollar, the Chinese offshore yuan, and a few others. Market participants anticipate that the rupee will continue to trade within the range of 83.05 to 83.30 against the US dollar for the time being.
