The Indian rupee ended marginally lower on Wednesday amid a global bond rout, as likely dollar sales by the Reserve Bank of India (RBI) prevented a move towards record lows.
The rupee closed at 83.24 against the U.S. dollar compared with a close at 83.2050 in the previous session.
A stronger greenback and elevated U.S. Treasury yields pressured the rupee but the central bank likely sold dollars, via state-run banks, near 83.25-83.26 levels, traders said.
The rupee fell to an intra-day low of 83.2650 but consistent dollar supply from the RBI snapped the momentum, a foreign exchange trader at a state-run bank said.
State-run banks, likely on behalf of RBI, were seen supplying dollars nearly until the close of the spot trading session, the trader added.
The RBI also likely conducted near-tenor sell-buy swaps on the USD/INR in a bid to contain weakness in the unit while also keeping a lid on systemic liquidity.
Most Asian currencies weakened, with the Korean won, down by over 1%, leading losses.
The dollar index rose earlier in the session but edged lower to 106.86, down 0.2% from previous close.
Selloff in bonds across the world hurt risk appetite. The U.S. 30-year Treasury yield spiked to 5% for the first time since 2007 and Germany’s 10-year bond rate rose to 3%.
The 10-year U.S. Treasury was at 4.81% while the Brent crude oil contract were down over 1% at $89.86 per barrel.
Investors awaited U.S. labour market data and the RBI’s monetary policy decision due later this week.
“The market is now discounting a hawkish pause from the RBI,” said Gaurang Somaiya, a foreign exchange researcher at Motilal Oswal Financial Services.
The level of 83.30 will continue to serve as a strong support for the local unit, Somaiya said.
The rupee had hit a record low of 83.29 in October 2022.
