The Indian rupee closed at an all-time low against the US dollar on August 17, tracking weakness in global equities markets, rise in US treasury yields and fall in the Chinese currency, dealers said.
Further, growing concerns due to speculation regarding a US Federal Reserve rate hike, while worrisome economic indicators further fueled apprehensions of a potential Chinese economic slowdown, they added.
The home currency ended at 83.15 a dollar, down 0.23 percent from its previous close of 82.96. The domestic currency opened at 83 and touched a low of 83.16 per dollar. Meanwhile, in intraday it is still 0.2 percent away from its record low. Last time, the Rupee hit a record low intraday of 83.29 on 20 October 2022. Local equities markets remained volatile with falling for 12 out of 18 trading sessions.
“USDINR spot is trading at 83.14, up 18 paise, due to rise in the US bond yields and fall in the Chinese currency. We suspect RBI may have intervened and sold dollars,” said Anindya Banerjee, VP - Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.
US bond yields surged to a 15-year peak, driven by robust economic data that dispelled assumptions of a US Federal Reserve pause or reversal in interest rate hikes. The US 10-year yield climbed to 4.31 percent, while the UK 10-year gilt also reached a 15-year high.
Recent releases of stronger-than-anticipated US Producer Price Index (PPI), retail sales, and industrial production data revived expectations that the US Federal Reserve could prolong its rate hike trajectory.
Analysts noted that the US economy's resilience defied forecasts that a cumulative over five percentage point increase in Federal Reserve interest rates would lead to a recession. Minutes from the latest policy meeting revealed ongoing concern that inflation might not recede, warranting further rate hikes.
Amidst these developments, crude oil extended its decline, hitting a two-week low due to worries about Chinese demand. Fitch highlighted potential risks to China's sovereign rating, stating that any extension of government debt might prompt a reevaluation of China's A+ rating. The looming specter of a potential debt crisis in China's property sector has remained a significant drag on market sentiment.
In the offshore market, the rupee touched 83.45 levels as speculators continued to bet on the USD longs due to the rising US 10-year treasury yield. But the RBI came to the rescue in the offshore market and intervened by selling the dollar, which limited the upside, according to analysts.
Meanwhile, FII inflows are still positive for August month, which shows the local currency has scope to arrest the fall, analysts expect.
Asian currencies were trading mixed. China Offshore gained 0.48 percent, Indonesian rupiah rose 0.39 percent, Thai Baht and Japanese yen gained 0.18 percent each. Among losers, Malaysian ringgit fell 0.54 percent. The Philippines peso and South Kroean won lost 0.38 percent each. The Taiwan dollar lost 0.22 percent.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 103.41, down 0.03 percent from its previous close of 103.43.
(with Bloomberg inputs)
Rupee ends at record low against US dollar as risk aversion weighs - Moneycontrol
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