Rupee flat at 84 against US dollar as local equities offset gains

The Indian rupee was nearly unchanged on Monday as the weakness in local equities blunted the impact of a rise in most Asian currencies, as the dollar weakened ahead of the outcome of the US presidential election later this week.

 

The rupee was at 84.0675 against the US dollar as of 10:10 a.m. IST, compared to its close at 84.0750 in the previous session.

The benchmark Indian equity indices, the BSE Sensex and Nifty 50, were down more than 1 per cent each. 

Persistent selling by foreign investors and a tepid earnings season have hurt local stocks, with the benchmarks declining about 8 per cent each from their record highs hit in late September. 

"Major events are lined up this week, so most traders may avoid heavy positioning. But continued equity outflows may keep the rupee under pressure," a trader at a foreign bank said. 

Overseas investors had net sold local stocks worth $11 billion in October. 

Routine interventions by the Reserve Bank of India, though, have ensured that the rupee doesn't suffer sharp losses. Traders expect the central bank to remain on vigil amid the looming uncertainty about the outcome of the US presidential election. 

"The outcome of the closely contested race remains uncertain, raising the potential for significant market volatility," DBS Bank said in a note. 

The dollar index was down 0.2 per cent at 103.6 on Monday after a well-respected poll showed that Kamala Harris had taken a surprise 3-point lead in the state of Iowa, a reversal from a September poll that had Trump with a 4-point lead. 

Asian currencies were mostly higher, with the offshore Chinese yuan touching a three-week high of 7.1064. 

In addition to the US elections, the rupee will also be influenced this week by the Federal Reserve's policy decision and monetary policy commentary on Wednesday. The Fed is widely expected to cut policy rates by 25 basis points.

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