The Indian rupee hit a fresh record low on a closing basis against the US dollar following decline in Asian currencies, driven by expectations of strong demand for the dollar due to resilient US yields. Regular RBI interventions have effectively limited depreciation, traders said.
The home currency opened at 83.14 and touched a low of 83.11 in intraday, close to the 83.29 record low hit in October 2022. The domestic currency ended at an all-time low on a closing basis at 83.21 a dollar, down 0,09 percent from its previous close of 83.14.
"Disappointing European data may further support the dollar. Rising US treasury yields and concerns over global economic growth may also weigh on Rupee. However, positive domestic markets may support rupee at lower levels", said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.
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The dollar stayed strong on positive US economic data, increasing the likelihood of more interest rate hikes. The yen hit a 10-month low. Market odds of a quarter-point rate hike in November rose to 60 percent from 50 percent after strong service-sector data. Traders are now watching for next week's US inflation data to gauge the future policy direction.
According to Tapan Patel, Fund Manager – Commodities, Tata Asset Management, on the domestic front, weaker monsoon may add pressure with poor August rain deficit numbers. Asian currencies traded weaker amid weak China growth and on rising expectations that US Fed may opt for longer “hawkish pause” with elevated rates, Patel added.
Brent oil rose to $90.50 a barrel, after US crude inventories came lower than expected.
"As the dollar gained steam, the rupee fell close to its closing low as RBI’s presence seemed only to keep supplying dollars without changing its direction” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. “The oil upside is another problem for the rupee as it goes through another rough day today despite fundamentals being one of the best amongst major economies."
Asian currencies were trading weaker. South Korean won fell 0.33 percent, Indonesian rupiah lost 0.22 percent, Thai Baht, Taiwan dollar and China Offshore declined 0.2 percent each, Malaysian ringgit lost 0.07 percent. However, the Philippines peso rose 0.3 percent while the Japanese yen gained 0.13 percent.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 104.95, up 0.07 percent from its previous close of 104.86.
(with Bloomberg inputs)
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