Rupee breaches 84/$ on foreign as banks buy dollars for FPI outflows

The rupee breached the psychologically crucial mark of 84 per US Dollar for this second time this month. The fall was despite dollar sales by the Reserve Bank of India, as foreign banks persistently bought the greenback for outflows from domestic equities. Some dealers said stop losses were also triggered around 84/$ level which took the rupee to 84.07 a dollar. 

“There were major outflows from equities today, some stop losses were also triggered but there are more waiting. RBI is there at 84.10 so don't think that will be breached,” a dealer at a large state-owned bank told the Informist. 

Dealers said the outflows from equities were due to risk-off sentiment among traders due to rising tensions in West Asia. The head of UN peacekeeping informed the Security Council that the safety and security of peacekeepers in Lebanon is “growingly at risk,” following Israeli forces firing on United Nations Interim Force in Lebanon in the southern region, resulting in two injuries. Also on Friday, Israeli air strikes on Beirut left 22 dead and more than 100 wounded. 

The rupee was also weighed down as stop losses were triggered around 84/$ level but as it touched 84.07 a dollar level, further depreciation was capped by the RBI's dollar sales. "At 84.10 it would breach all stop losses in the market," a dealer at a foreign bank said. 

Strength in the dollar index also weighed on the Indian currency, dealers said. The dollar index strengthened after data showed US CPI rose 0.2% in September, against economists' expectations of a 0.1% rise in a Reuters poll. At 1110 IST, the dollar index, which measures the strength of the dollar against six major currencies, was 102.90, compared to 102.88 on Thursday and 102.88 on Wednesday. The dollar index had surged to 103.18 on Thursday, the highest since Aug. 15.

For the rest of the day, the rupee is seen in the range of 83.90-84.10 against the dollar, dealers said. They see strong technical support for the Indian currency at 84.10 a dollar.