India rupee posts weekly fall despite rate hike amid adverse flows, weak sentiment
MUMBAI: The Indian rupee ended flat on Friday but declined in a week in which the Reserve Bank of India delivered its first rate hike in nearly four years that did little to help the Asian currency bogged down by adverse hedging and investment flows. The Indian rupee closed at 96.73 per dollar, barely changed from its previous close, staying within striking distance of its all-time low of 96.96…
India's currency, the rupee, experienced a minor decline despite the Reserve Bank of India's first rate hike in nearly four years. The rupee closed at 96.73 per dollar, barely altering from its previous close, hovering near its all-time low of 96.96 set in May. State-run banks' sales, likely on behalf of the RBI, provided support to curb the rupee's depreciation.
However, the Indian currency remains bearish, with analysts predicting it to hover near record lows over the next three to six months. While the central bank's interventions have somewhat mitigated the rupee's weakness, the sentiment remains negative, and the top end is restricted by the RBI due to substantial foreign exchange reserves.
Experts forecast the rupee to reach 97.50 by September 2027. The Options Market Gauge, the 1-month 25 delta risk reversal, indicates that traders are more inclined towards a weaker rupee than expecting a rally. Despite a slight improvement in global conditions, with oil prices and the dollar off recent highs, the rupee has not gained significantly.
India's foreign exchange reserves dwindled for a fourth week, falling to $734.6 billion as of October 2, about $50 billion less than their record high in September.
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