Rupee may slip to record low as worries over Trump win weigh on Asia FX

The Indian rupee may slip to an all-time low at open on Monday, as lingering worries over the impact of Donald Trump’s win pressure Asian currencies.

The local currency will rely on intervention by the Reserve Bank of India (RBI) for support, traders said.

The 1-month non-deliverable forward indicated that the rupee will open at 84.38-84.40, compared to 84.3750 on Friday and the 84.38 lifetime low.

Asian currencies were mostly lower on Monday with the Thai baht down 0.5% and leading losses.

Trump’s victory in the U.S. presidential election has raised concerns about potential trade tariffs hurting regional currencies with the Chinese yuan seen at the frontline of the risk.

The offshore Chinese yuan was a tad higher in Asia trading after declining 0.7% on Friday after China’s latest fiscal stimulus plan did little to enthuse investors.

The dollar index was little changed at 105, hovering close to its highest in four months hit last week after Trump’s victory led to a surge in the greenback and U.S. bond yields.

Persistent outflows from local stocks have also been a pain point for the rupee.

“The pace of foreign equity outflows remains the primary factor determining the trajectory of the USD/INR. However, it is still premature to expect foreign equity outflows from India to end,” Societe Generale said in a note.

Overseas investors have net pulled out about USD 2.5 billion from Indian stocks over November so far, adding to the USD 11 billion of outflows seen in October.

It’s “quite likely that it (rupee) will remain in a tight range with the RBI guarding against sharp declines,” a trader at a state-run bank said.

Still, given the directional bias, a decline to 84.50 this week cannot be ruled out, the trader said.