By Ashwin Manikandan
MUMBAI (Reuters) – The Indian rupee fell on Thursday as aggressive dollar buying by oil importers towards the end of the session pressured the local currency even as persistent greenback sales by foreign banks helped offset some of the losses.
The Asian currency closed 0.24% lower at 87.2700 per U.S. dollar on Thursday against its previous close of 87.0650.
“There were some debt inflows which had masked the impact, but with that done, we saw the impact of dollar bids,” a trader with a brokerage said.
Meanwhile, foreign banks were on the offer side in the dollar/rupee pair again for most part of the session on Thursday, extending the pattern seen over the past two days – a move that has puzzled traders.
The persistent selling by foreign banks coupled with the Indian government’s proposed tax cuts and U.S. President Donald Trump’s talks with Russian and Ukrainian Presidents helped the rupee move higher than 87 for the first time this month on Tuesday.
However, the upcoming August 27 deadline for the implementation of additional 25% U.S. tariffs on Indian goods is expected to pose a fresh threat to the rupee.
“The expectation is that the rupee will be on the weaker side till September,” said Dilip Parmar, currency analyst at HDFC Securities.
Earlier this week, U.S. Treasury Secretary Scott Bessent’s accusations of India profiteering from purchases of Russian oil during the Ukraine war further hurt the rupee.
Also closely watched will be U.S. Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday, in which market participants will look for clues on interest rate trajectory in the world’s largest economy.
Asian currencies traded mixed on Thursday while dollar index was flat at 98.238 as of 1536 IST.
(Reporting by Ashwin Manikandan; Editing by Janane Venkatraman)
