MUMBAI, July 31 (Reuters) – The Indian rupee dipped to its weakest level on record on Wednesday, extending the gradual decline seen over recent trading sessions on outflows from local equities, volatility in the yuan and persistent dollar bids from local importers.
The rupee closed at 83.72 against the U.S. dollar, nearly unchanged from its close of 83.7275 in the previous session.
The currency hit an all-time low of 83.7450 earlier in the session, slipping past its previous lifetime low of 83.74.
It hit lifetime lows in six of the last eight trading sessions and was down about 0.4% in July, its worst month-on-month performance since March.
Despite the weakness, interventions from the Reserve Bank of India (RBI) have ensured that volatility remained subdued.
Intermittent dollar sales from state-run banks, likely on behalf of the RBI, helped limit the currency’s losses on Wednesday as well, traders said.
The rally in the yen also helped lift the offshore Chinese yuan, one of the rupee’s closely tracked peers, by 0.3% to 7.21.
Investors now await the Federal Reserve’s policy decision due later on Wednesday.
The U.S. central bank is widely expected to keep rates unchanged and investors will pay attention to remarks from Chair Jerome Powell for cues on the future path of benchmark interest rates.
“Powell will reiterate a cautious tone on inflation this time, but he has often been the voice of a more dovish faction of the FOMC and the press conference could generate some USD-negative headlines,” ING Bank said in a note.
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Reporting by Jaspreet Kalra; Editing by Janane Venkatraman
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