The Indian rupee declined on November 28, almost reaching its all-time low for the week. It closed at Rs 84.4850 against the US dollar, down from Rs 84.4525 in the previous session. Last week, the rupee weakened to its all-time low of 84.5075
The major factors driving this downward move were demand for dollars to import oil. However, the central bank’s intervention helped limit the losses.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said, “The RBI’s reserves have fallen from $705 billion in October to $657 billion, raising concerns about currency stability. Further intervention seems unlikely, making the rupee more vulnerable to external pressures. The rupee is expected to trade within the support zone of 84.55-84.70, with resistance near 84.30-84.35.”
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The central bank has frequently intervened to stabilize the rupee, particularly around the key level of 84.50. Meanwhile, the dollar index rose to about 106.3, recovering from a 0.7 per cent drop on Wednesday, its largest single-day decline since late August.
According to a Reuters poll, investors have increased their short positions on most emerging Asian currencies, including the rupee, due to concerns over the policies of the incoming U.S. administration.
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Attention is now shifting to India’s GDP data for the July-September quarter, set to be released on Friday, which will help investors assess the impact of the economic slowdown on foreign outflows from Indian stocks.
(With Reuters Inputs)
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