The Indian rupee declined slightly on Thursday following a rally on the safe-haven dollar, but expectations that the central bank will not relent in the currency’s defence helped it fare better than Asian peers.
The rupee was at 83.2300 to the U.S. dollar at 10:25 a.m. IST, down less than 0.1% from 83.18 in the previous session. The Korean won declined 0.7%, the Indonesian rupiah and the Thai baht lost 0.4% to the U.S. currency.
The dollar index rose to 106.78. The Japanese yen dropped to near 150.50 to the dollar, prompting comments from officials.
The rupee is “expectedly coping” much better with the dollar index’s move higher, “and the reason is pretty straightforward”, a vice president of forex sales at a bank said.
“With what the RBI (Reserve Bank of India) has been doing, it’s a no-brainer that rupee will outperform Asia on good days for the dollar.”
Over the last several sessions, the RBI has regularly intervened in the forex markets to prevent the rupee from weakening below the 83.29 record low, hit in October 2022.
The rupee is “fairly managed by the RBI through their protective action via spot/forward/futures intervention,” Amit Pabari, managing director at fx advisory firm CR Forex, said.
The selloff in equities fuelled by higher U.S. Treasury yields boosted demand for the dollar. Shares in Japan, South Korea were down about 2% and futures indicated more losses for U.S. equities.
The 10-year U.S. yield rose overnight following housing data that reinforced the resilience of the world’s largest economy. The yield was at 4.96% in Asia trade.
Indian equities extended losses with the Nifty 50 Index headed for the sixth straight daily decline and at the lowest since June.
