By Nimesh Vora
MUMBAI, – The Indian rupee dropped on Monday on the back of a broadly higher U.S. dollar, but likely intervention by the central bank mitigated losses.
The rupee was at 82.9250 to the dollar by 11:02 a.m. IST, down from 82.8450 on Friday.
The currency hit a low of 83.0725 before the Reserve Bank of India (RBI) likely sold dollars through public sector banks, according to traders.
The dollar index, meanwhile, rose to 102.98, while Asian currencies declined up to 0.8% on the back of higher U.S. yields.
“Ongoing RBI efforts to counter USD pressure are shaping the INR’s performance,” Amit Pabari, managing director at FX advisory firm CR Forex, said.
The RBI’s effort to make sure that the rupee does not depreciate was “in contrast” to the weakness on the Chinese yuan and the Japanese yen, Pabri added.
The offshore Chinese yuan was down to 7.28, its lowest in more than a month. The yen declined to 145.22, the lowest since November 2022.
The uptick in U.S. yields on supply worries weighed on demand for Asian currencies. The 10-year U.S yield is up 16 basis points over the last two sessions.
The move came despite a small downtick in the University of Michigan survey’s measure of long-run inflation expectations.
USD/INR forward premiums dropped, tracking declines in the local unit. The 1-year implied yield was down 4 basis points to 1.58%. (Reporting by Nimesh Vora; Editing by Varun H K)
