The rupee is hovering near all-time lows as the central bank holds the line

The Indian rupee hovered near all-time lows on Thursday as a likely intervention from the Reserve Bank of India helped stave off continued pressure on the South Asian currency.

The rupee closed at 88.7825 against the US dollar, almost flat on the day but within reach of last week’s low of 88.80.

Sustained dollar selling by state-owned banks, most likely on behalf of the RBI, has supported the currency in recent sessions, traders said.

The RBI “is defending 88.80 quite strongly and expects such price action to continue until that subsides,” said a trader at a foreign bank.

Concerns about the economic fallout from high US trade tariffs and stricter immigration policies have kept pressure on the currency. Foreign investors have pulled a net of almost $600 million from local stocks so far in October, pushing outflows above $18 billion this year.

Meanwhile, likely inflows from a major IPO helped push the dollar-rupee overnight swap rate higher, with traders taking advantage of sell-buy swaps from at least two major foreign banks. LG Electronics India’s $1.3 billion IPO was set to close for bids on October 9, with qualified institutional buyers having subscribed over 95 times as of 3pm IST. Elsewhere, the dollar index rose to a two-month high and was last at 98.9, boosted by a weakening euro due to a French political crisis and a struggling yen amid a change of guard in Japan’s ruling party.

“Political uncertainty in France and a possible slower pace of rate hikes by the Bank of Japan are strengthening support for the U.S. dollar,” MUFG analysts said in a note.