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The Indian rupee fell to a record low on Friday as a rebound in U.S. Treasury yields pressured Asian currencies.

The rupee closed at 83.34 against the U.S. dollar, a record closing low, and down 0.07% versus its close of 83.28 on Thursday. On the week, the local unit shed 0.2%.

The rupee hit its record low of 83.42 during the session after breaching its previous alltime low of 83.2950 which was hit on Nov. 1.

The Reserve Bank of India (RBI) likely intervened to limit the rupee’s depreciation, four traders said.

While the rupee has broken its long-enduring support of 83.30, a clearer picture will only emerge closer to Wednesday or Thursday, said Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group.

If the rupee sustains around 83.40 levels next week, it may settle into a weaker range, Koikarra added.

However, traders said the rupee is unlikely to see sharp declines as the central bank is expected to step in intermittently to curtail the fall.

The pressure on the currency also heightened on Friday due to an outage of the interbank order matching system, traders said.

Most Asian currencies weakened with the Korean won leading losses down by over 0.5%.

The dollar index held just shy of 106 handle while the 10-year U.S. Treasury yield last quoted at 4.64%, well above the week’s low of 4.48%.

U.S. yields rebounded following hawkish commentary from U.S. Federal Reserve officials, including Chair Jerome Powell, who signalled that the Fed may tighten rates further if conditions warrant it.

The rupee will keep weakening, but the slide is likely to be gradual as the RBI won’t allow excess volatility, a foreign exchange trader at a private bank said.

Investors now await October inflation data for the U.S. and India due next week.

  • Published On Nov 10, 2023 at 05:40 PM IST

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