MUMBAI: The rupee hit an all-time low on Friday ahead of the Union Budget, making it the worst-performing major Asian currency in Jan. The decline was driven by reiteration of US President Donald Trump’s warning of 100% tariff of BRICS nations, coupled with portfolio outflows and expectations of an interest rate cut.
The rupee fell to 86.65 against the dollar down from 86.56 on Thursday.Meanwhile, RBI’s $5-billion 6-month dollar-rupee buy-sell swap auction saw strong demand, receiving $25.6 billion in bids from 253 participants. The central bank accepted 28 bids totalling $5.1 billion, with a premium cut-off of 96.81 paisa, slightly below market levels. The FX swap allows RBI to inject rupee liquidity while absorbing excess dollars, reversing the transaction in six months. Dollar-rupee forward premiums dipped slightly, with the 1-year implied yield last quoted at 2.24%.
The rupee has declined 1.1% this month. This marks the second consecutive monthly decline of over 1%. Other Asian currencies also weakened on the day.
