The 84-level was being closely watched by traders, with analysts expecting the central bank to step up intervention once it’s breached.
“There were interventions at 83.98 and 83.99 levels today as well but the outflows from assets have been very strong, especially from equities,” said Kunal Sodhani, vice president at Shinhan Bank India. “After this 84 break, it’ll be important to watch how Reserve Bank of India’s intervention takes place.”
The rupee has been steadily weakening this year to set new record lows, while remaining in a narrow range as the central bank focused on currency stability. The RBI changed its stance to “neutral” on Wednesday from a hawkish “withdrawal of accommodation,” spurring bets that the country is on the path to cut interest rates.
“From RBI’s perspective, as long as the move is not sharp, the central bank can also maintain some FX competitiveness against other currencies,” said Michael Wan, senior currency analyst at MUFG Bank.
The country’s foreign-exchange reserves were at $701.2 billion as of Oct. 4, according to the latest data on Friday, indicating the large firepower the RBI has to keep the currency stable.
