Traders pointed to broad-based demand for dollars, which was met with central bank intervention, leaving the currency at record lows for much of the session.Earlier this week, the International Monetary Fund reclassified India’s currency system as a ‘crawl-style arrangement’, two years after labeling it as ‘stabilized’.
The rupee is under pressure from a widening commodity trade deficit, weak portfolio inflows and concerns over “the central bank’s ability to intervene as the rupee is already significantly short (on USD/INR) in the non-deliverable futures market,” said Abhishek Goenka, CEO of FX consultancy IFA Global.
India’s trade deficit hit a record high in October amid a surge in gold imports and a drop in exports to the US after the imposition of tariffs of up to 50%. India expects to reach a trade deal with the US before the end of this year as “most issues have been resolved, India’s trade secretary said on Friday. Elsewhere, the dollar index rose 0.2% to 99.75, on track for a weekly decline as investors stuck to their bets that the Federal Reserve would do so.” Lower the interest rate next month.
Asian currencies traded mixed, with the foreign Chinese yuan hovering around its strongest level in over a year, while the Korean won fell 0.5%.
The focus now is on India’s GDP growth data for the July-September quarter, due later in the day. (Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
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