Source: LIVEMINT
By Jaspreet Kalra
MUMBAI, May 22 (Reuters) - The Indian rupee declined to a more-than-one-month low on Thursday, pressured by likely outflows from local equities and the breach of a key technical support level that triggered stop-losses on speculative long bets.
The South Asian currency closed at 86.0025 against the U.S. dollar, down 0.4% on the day. It fell past a key support level of 85.80 to hit a trough of 86.1025 during the session, its lowest since April 11.
Dollar bids from foreign banks and one large state-run lender, likely on behalf of their clients, also weighed on the rupee, traders said.
India's benchmark equity indexes, the BSE Sensex and Nifty 50 closed lower by around 0.8% each on the day, tracking losses in global peers.
An uptick in the dollar index also weighed on the currency and its regional peers in the afternoon session.
The rupee is down about 1.5% over May so far, lagging most regional peers. Traders say that despite broad weakness in the dollar, strong demand from local companies and foreign banks for the greenback has weighed on the rupee.
In the medium-term though, BofA Research expects the rupee to track the dollar's weakness and get support from improving capital inflows and trade engagement. The firm has joined peers in turning more bullish on the currency.
Uncertainty about U.S. trade policies combined with worries over the U.S. fiscal outlook has weighed on the dollar, Treasuries and equities.
U.S. President Donald Trump's sweeping tax and spending bill, up for a vote later in the day, would add $3.8 trillion over the next decade to the current debt of $36.2 trillion.
"U.S. equity futures and Treasuries are stabilising this morning, but the risks of another rough session for U.S. markets remain tangible," ING Bank said in a note. (Reporting by Jaspreet Kalra; Editing by Savio D'Souza)
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