The Indian rupee touched its weakest level on record on Monday, as persistent outflows from local stocks blunted the impact of a weaker dollar that helped lift the currency’s regional peers ahead of the U.S. presidential election.
The rupee closed at 84.1150 against the U.S. dollar after touching its all-time low of 84.1225.
The benchmarks are down about 8% from their respective record highs hit in late September, hurt by the exodus of foreign investors amid a tepid earnings season.
Although, Routine interventions by the Reserve Bank of India, such as on Monday, have helped the rupee avoid sharp declines despite pressure from chunky outflows from local stocks and elevated US bond yields.
The Reserve Bank of India is well-equipped to deal with a rise in market volatility and pressure on the rupee if Republican candidate Donald Trump wins next week’s U.S. presidential election, two sources familiar with the bank’s thinking told Reuters last week.
The dollar index was down about 0.2% on Monday at 103.7 while most Asian currencies rose, with the offshore Chinese yuan rising to a near three-week high of 7.08.
The greenback was likely weighed down by unwinding of long positions in the lead-up to the U.S. presidential election results.
A Republican clean sweep can send the dollar higher, but probably by less than how much a Harris win could hit USD. The dollar might not rally at all if Trump wins but Democrats secure the (U.S. House of Representatives.
Investors are also bracing for some uncertainty as the winner of the U.S. presidential race might not be known for days after voting ends.
Today is the day of the US Election, the competition between Donald Trump and Kamala Harris is heating up, especially in vital swing states. Both candidates are making final pushes in what is shaping up to be a tightly contested presidential race.
Approximately 244 million people are eligible to vote in the upcoming US presidential election on 5 November. Polls open at 7 a.m. and close at 8 p.m. in most states, although times may vary. In 2020, about two-thirds of these eligible voters participated. The outcome of the next presidential election will hinge less on the national voter turnout and more on a few thousand voters in key battleground or swing states.
Technical Outlook – U.S. Dollar / Indian Rupee
The USD/INR pair touched an all-time high of 84.12 yesterday, closing with a modest gain of 4 paisa, even as the US dollar retreated significantly.
In the chart, the pair is struggling to close above the immediate resistance at 84.14, forming a cluster of indecisive candlestick patterns. The RSI (14) and its 9-day SMA are trading around the 60 level, suggesting that any rise toward the 84.18–84.25 zone may face selling pressure, potentially driving the pair back down toward support levels at 84.09–83.98.
Looking ahead, the upcoming US election, along with key policy meetings from the Federal Reserve and the Bank of England, is expected to fuel volatility in the market this week.
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