The rupee hit a fresh all-time low of 81.93 against the US dollar in sync with losses in global equity and currency markets today.
The home currency opened at 81.93 a dollar on Wednesday. At 9.30am, the domestic currency was trading at 81.86 a dollar, down 0.42 percent from its previous close of 81.58.
The 10-year bond yield opened 3 basis points higher at 7.32 percent from its previous close of 7.293 percent.
Selling pressure by foreign investors in equity markets also dampened the sentiment in traders. FIIs sold over Rs 10,000 crore in local equities in the last one week.
Brokerage firm CR Forex expects the currency to head weaker towards 82.50-83.00 over the near term. On the contrary side, 81 and 80.50 will act as a strong support level.
"Rupee has been holding remarkably well with RBI intervention supporting the market. We believe that it might be better for the RBI to allow the rupee to depreciate a bit, finding its natural balance," said SBI Ecowrap in a note to investors.
The US 10-year treasury yields touched 4 percent overnight for the first time since 2010 after hawkish speeches from Fed member Bullard. He reiterated that inflation was a serious risk and that more interest rate hikes were needed. He added that the credibility of inflation targeting itself is at risk and that the Fed must respond.
Many Asian and Emerging Market currencies hit a multi-year low. The yen is down by more than 25 percent to trade at 144 against the dollar as the Bank of Japan is busy with bond buying and capping the 10-year yield at 0.25 percent.
Among Asian currencies South Korean won was down 1.12 percent, Indonesian rupiah 0.72 percent, China Offshore 0.66 percent, China Renminbi 0.6 percent, Taiwan dollar 0.58 percent, Singapore dollar 0.44 percent, Thai Baht 0.21 percent, Malaysian ringgit 0.18 percent.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 114.53, up 0.0.36 percent from its previous close of 114.106.
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