By Jaspreet Kalra
MUMBAI(Reuters) – The Indian rupee weakened past a key support level on Thursday to hit a three-week low, pressured by a broadly stronger dollar, even as exporter dollar sales and portfolio inflows helped the local currency limit its losses.
The rupee closed at 86.0750 against the U.S. dollar, down from its close at 85.94 in the previous session.
While the rupee had steadied below the 86 mark earlier in the day, it fell to a low of 86.09 towards the close of the session.
Traders cited dollar sales from exporters and foreign banks, likely on behalf of custodial clients, which helped limit the rupee’s losses even as a firmer dollar hurt Asian currencies, which weakened between 0.1% to 0.4%.
The dollar index rose 0.4% to 98.7 as traders assessed U.S. President Donald Trump’s latest comments on Fed Chair Jerome Powell’s future, while concerns over a pivotal election in Japan drove the yen lower by 0.5%.
The dollar index whipsawed on Thursday, initially dropping on speculation that Trump would sack Powell, before trimming losses after the report was denied.
“Trump’s denial caused an unwinding of all market moves. It’s a clear symptom of the resistance developed by markets for the rollercoaster of headlines that have characterised Trump’s term so far,” ING said in a note.
M regional stocks were in the green on Thursday, even as India’s benchmark equity indexes, the BSE Sensex and Nifty 50, ended down by about 0.4% each.
Investors now await the release of U.S. retail sales data for June and remarks from Federal Reserve policymakers late in the day.
The remarks are likely to be in focus amid Trump’s almost daily criticism of Powell for not lowering interest rates.
(Reporting by Jaspreet Kalra; Editing by Vijay Kishore)
