By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee lingered near its all-time low on Thursday as likely intervention by the Reserve Bank of India helped stave off ongoing pressure on the South Asian currency.
The rupee closed at 88.7825 against the U.S. dollar, nearly flat on the day, but within touching distance of its lifetime low of 88.80 hit last week.
Persistent dollar sales by state-run banks, most likely on behalf of the RBI, have supported the currency over recent sessions, traders said.
The RBI “is quite strongly defending 88.80 and until that eases, expect such price action to continue,” a trader at a foreign bank said.
Worries over the economic hit from steep U.S. trade tariffs and tighter immigration policies have kept up pressure on the currency, with foreign investors pulling out a net of nearly $600 million from local stocks in October so far, pushing year-to-date outflows to over $18 billion.
Meanwhile, likely inflows related to a big-ticket initial public offering helped boost the dollar-rupee overnight swap rate, with traders citing sell-buy swaps from at least two large foreign banks.
LG Electronics India’s $1.3 billion IPO was slated to close for bids on October 9, with qualified instituional buyers subscribing over 95 times, as of 3 P.M. IST.
Elsewhere, the dollar index ticked up to a two-month high and was last at 98.9, boosted by a weakening euro on the heels of a French political crisis a struggling yen amid a change of guard in Japan’s ruling party.
“Political uncertainty in France and a potentially slower pace of rate hikes from the Bank of Japan are reinforcing support for the US dollar,” analysts at MUFG said in a note.
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema)
