The rupee depreciated five paisa to 84.74/$1, against its previous close of 84.69, LSEG data showed. “There were likely payments by defence companies, and with no inflows and constant dollar buying, the currency depreciated.
The RBI did intervene and the currency went up to 84.64/$1, but since there were further outflows, the RBI must have let the rupee depreciate to these levels,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
The dollar index was up 0.1% at 106.5 as traders await remarks from the US Federal Reserves chair Jerome Powell later in the day. The likelihood of a 25 basis point rate cut by the Fed later in December is at 74%, according to CME FedWatch Tool.
The US non-farm payroll data – one of the most important variables considered by the US Fed when it comes to deciding on the trajectory of interest rates – is expected on Friday. This will give further cues on US rate cuts.