The rupee closed at 84.4825 against the dollar on Friday, nearly flat on the day but within touching distance of its lifetime low of 84.5075 hit last week.
For the month, the rupee fell by nearly 0.5%, the steepest decline since March.
The dollar has rallied and U.S. yields have risen since Trump’s victory in the Nov. 5 presidential election, hurting emerging market assets.
The dollar index is up 2% in November while the 10-year U.S. Treasury yield rose to as high as 4.50% earlier in the month, its highest since July.
Foreign investors net sold more than $1.7 billion of local stocks and bonds in November, adding to the $11.5 billion outflow of the previous month. Still, the rupee has fared better than most of its regional peers, largely on the back of frequent interventions by the Reserve Bank of India. In addition to its dollar-selling interventions across the spot, futures and non-deliverable forward market, the RBI has also asked banks to lower their speculative bets against the currency and has increased its scrutiny of lenders’ forex activity.
Traders expect the RBI to continue with its firm defence of the currency and only allow gradual depreciation.
Emerging market currencies may stay on tenterhooks heading into the inauguration of the incoming Trump administration in January as investors await clarity on its policies, especially surrounding trade tariffs.
“We believe the Indian rupee and IGB (Indian government bonds) would be the most resilient assets in Asia under the Trump presidency,” analysts at Societe Generale said in a note.
On the day, Asian currencies were mostly stronger benefiting from softness in the dollar, but the rupee was unable to gain in the face of dollar demand from foreign banks, traders said.