The Indian rupee held steady on Thursday, with market indicators suggesting it will stay rangebound, despite regional currencies bracing for fluctuations as the US presidential election approaches.
As of 11:00 a.m. IST, the rupee was trading at 84.0625 (Dh22.905) per US dollar, little changed from its previous close of 84.08. Gains in several other Asian currencies, which increased between 0.1% and 0.3%, provided minimal relief for the rupee. Throughout the week, the local currency has hovered near record lows, impacted by a rise in US bond yields amid rising odds of Donald Trump’s victory in the upcoming election and persistent outflows from Indian equities.
Routine interventions by the Reserve Bank of India (RBI) have helped shield the rupee from significant declines, traders said. These interventions have also kept the rupee’s near-term implied volatility stable, even as volatility in regional peers has increased ahead of the election.
For example, the offshore Chinese yuan’s one-month implied volatility surged to 7.5%, up from 6.7% at the end of the previous month, while the rupee’s volatility remained around 2%.
“U.S. tariff risk is growing, given rising odds of Trump winning,” noted MUFG Bank. “Trump’s tariffs would have a significant negative impact on the outlook for Asian economies and pose downside risks to our forecasts for Asian currencies.”
Despite subdued volatility, the rupee has outperformed many of its regional counterparts. In October, Asian currencies have declined by 0.6% to 4.5%, while the rupee has weakened by only 0.3%.
