Rupee Closes Weaker As Global Funds Continue To Offload Indian Stocks

The Indian rupee closed weaker on Thursday, after holding above the 84 mark as foreign investors continued to offload domestic stocks.

The rupee depreciated by 7 paise to close at 84.07 against the greenback, according to Bloomberg. The local currency had closed at 84 on Wednesday.

The Reserve Bank of India has been protecting the level of 84.07 for the past four days and will be expected to continue protecting the same, according to Anil Bhansali, executive director at Finrex Treasury Advisors LLP. "Hyundai outflow is expected in the next few days, as the money will be passed on to the parent in South Korea."

The rupee is expected to trade in the range of 83.90 to 84.15 on Friday, Bhansali added.

While a depreciating bias will be maintained in the near and medium term, the RBI is likely to intervene whenever there are excesses on either side, according to Vishad Turakhia, managing director of Equirus Securities Pvt.

The RBI has deterred undue volatility in rupee by not just selling but also buying when inflows are positive to build reserves. These reserves are, therefore, used to mitigate the downside in rupee, Turakhia said.

Fundamentally, however, India's positive story continues with relative growth attractiveness and stable macros, Turakhia said.

India's trade deficit was reported at $20.78 billion in September, falling below the expected $24.64 billion.

Traders will watch out for the European Central Bank's monetary policy meeting and key US economic data, which may further influence the rupee's trajectory.

"Intermittent shocks will persist with geopolitics, US elections and China-related news, which the RBI is likely to cushion from its reserves," Turakhia added.

The Brent crude was trading 0.31% higher at $74.53 a barrel as of 3:41 p.m. The US Dollar Index was down 0.03% at $103.56.