Rupee approaches record low; RBI watched

The rupee approached a record low on Wednesday on doubts about whether the central bank can defend the currency with its existing cash-draining measures unless policy makers take additional steps.

The rupee fell to as low as 61.12 to the dollar, not far from its record low of 61.21 hit on July 8. It closed trade at 60.47/48 on Tuesday.

The one-month non-deliverable forward hit a record low of 61.72, breaking the previous low of 61.70 hit on July 8.

Dealers are watching for any possible intervention from the central bank.

The volatility in the currency led bond yields to jump, with the benchmark 10-year yield up 8 basis points at 8.33 percent.

The Reserve Bank of India Governor Duvvuri Subbarao is due to take questions from analysts at 1430 India time, while Finance Minister P. Chidambaram will address media at 1500 India time.