The rupee on Monday closed at a new provisional record closing low of 53.9750 to the dollar as global risk aversion spiked and as higher-than-expected domestic inflation data hit stocks by lowering expectations for future rate cuts.
Also Read: Why the rupee is among the weakest currencies
The rupee came very close to falling below the psychologically key 54-level and ended not far from the record low of 54.30 hit in mid-December.
Earlier in the day, four dealers said the Reserve Bank of India (RBI) likely sold dollars via state-run banks as the rupee approached its five-month low. (Read: Defending rupee: Is RBI fighting a losing battle?)
Traders said the RBI likely sold dollars from 53.90 rupee levels. At 2:58 p.m., the rupee was trading at 53.80/81 to the dollar.
Also Read: Five steps India has taken to bolster rupee
The rupee hit 53.95 to the dollar on May 4; a breach would make the currency test its all-time low of 54.30 seen in mid-December.
A weak euro, which was hovering near four-month lows, and demand from oil importers were weighing on the rupee, these dealers said.
Also Read: How S&P revision has hit the RBI's rupee battle
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