The Indian rupee hit a new low against the dollar on Wednesday, though the fall was less than at its Asian peers’, as the relentless surge in Treasury yields and the dollar index showed no signs of letting up.
The rupee closed at 81.94 per U.S. dollar, down from 81.58 in the previous session. It reached a new low of 81.95.
It is the fourth time in five sessions that the local unit has notched up it worst level against the dollar ever, dropping to almost 82 from 80 in a space of a week.
The Reserve Bank of India has been selling dollars as it seeks to looks to manage the volatility and the pace of the rupee’s fall, traders have said. Estimates of how much the RBI has sold recently range from $1.0-$1.8 billion per day.
“(The) INR is now firmly on the depreciation path, with just the pace of the move uncertain,” said Srinivas Puni, managing director at QuantArt Market Solutions.
“An 82.50-83.00 range looks possible for now, but an outsized move in the next one year remains a possibility, though with a small probability.”
The rupee’s decline on Wednesday was less than that of other major Asian currencies, likely thanks to the RBI’s intervention.
The Korean won, the offshore Chinese yuan, the Thai baht and the Indonesian rupiah were all down 1% to 1.2%.
Inflation concerns and the pace of the Federal Reserve’s monetary tightening pushed the 10-year Treasury yield above 4% for the first time in more than a decade, pressuring Asian currencies and hurting risk appetite.
The dollar index on Wednesday climbed to 114.78, a new twenty-year high.
Indian shares extended losses with the BSE Sensex falling to its lowest since July. Brent crude was little changed, hovering near $86.
Rupee forward premiums rose.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)