The Indian Rupee fell to its lowest closing level ever on Monday but mitigated more significant losses due to probable intervention by the Reserve Bank of India (RBI), which helped ease the impact of declines in regional currencies and ongoing Dollar outflows.

The Rupee closed at 84.0725 against the US Dollar, slightly down from the previous day's close of 84.0650, Reuters news agency reports.

A trader from a private bank reported that foreign banks were seen purchasing Dollars, likely acting on behalf of custodial clients.

That said, “pretty consistent” Dollar offers from state-run banks helped to limit the local currency's decline.

Furthermore, foreign investors have withdrawn over $9 billion from local stocks this month on a net basis, exceeding the previous high of $8.35 billion recorded in March 2020. 

Whereas benchmark Indian equity indices closed slightly lower, with both indices down approximately 4% for October so far. 

Meanwhile, Asian currencies declined between 0.1% and nearly 1%, while the Dollar index, measuring the greenback against six major peers, rose to 103.7.

Indeed, the Dollar index has increased by nearly 3% in October, driven by expectations of more gradual rate cuts by the Federal Reserve and growing likelihood of a Donald Trump victory in the upcoming US presidential election.

“FX markets seem to be positioning for a Trump victory in next month's US presidential election,” according to a note by ING Bank.

Investors are awaiting comments from Federal Reserve policymakers later on Monday for insights into the future direction of policy rates. 

Meanwhile, Dollar-Rupee forward premiums increased, with the 1-year implied yield rising by 5 basis points to 2.24%. 

This shift followed remarks from RBI head Shaktikanta Das, which led traders to reevaluate the chances of a rate cut in December.