India’s Rupee fell to its weakest-ever level on Friday, facing pressure from Dollar demand from local oil firms, custodial banks and lukewarm risk sentiment.

At the time of writing, the rupee was trading at 83.7175 against the greenback after falling to an all-time low of 83.7250 in early trading.

In the previous session, India’s currency had closed at 83.6975.

Reuters reports that the rupee has fallen to record lows in four out of the five trading sessions this week.

The declines occurred amid outflows from local equities, fluctuations in the Chinese Yuan, and speculation that the Reserve Bank of India (RBI) might permit a slight weakening of the Rupee to address its overvaluation.

Since Tuesday, when the government announced increased taxes on profits from equity investments and equity derivative transactions, foreign investors have net sold approximately $1 billion worth of Indian equities.

Furthermore, the Dollar index stood at 104.2 on Friday, whilst it was mixed for Asian currencies, with the offshore Chinese Yuan falling 0.2% after a steep rally on Thursday.

Volatility in the Yuan could threaten carry trades between the Chinese currency and the Rupee, increasing pressure on the Indian currency. 

Traders anticipate that the Rupee will likely continue to drift lower gradually, with the RBI expected to intervene to control the rate of depreciation.

Meanwhile, data released on Thursday indicated that the US economy grew more than anticipated in the second quarter, although inflation pressures eased.

“We continue to think that the Fed will start its rate cut cycle from September, and this month’s Fed meeting could be important to watch to see if there are any hints,” said Michael Wan, senior currency analyst at MUFG Bank.