The Indian rupee was down on Tuesday, pressured by a fall in Asian peers and dollar buying by foreign banks.
The rupee was last at 82.84 to the U.S. dollar, after closing at 82.7475 on Monday. The currency opened at 82.78 on Tuesday and touched an intraday low of 85.82.
“The demand (on USD/INR) is coming mostly from foreign banks. I assume it must be portfolio related outflow,” a foreign exchange trader said.
“I do not see this (the outflow) much of an issue (for the rupee.) Expectations that the RBI( Reserve Bank of India) will be there means there is no risk of visiting 83,” the trader said.
A few traders suspect that the RBI has been on the offer on USD/INR around the 82.80 levels.
“Obviously it’s (the RBI’s intervention) not aggressive. Just letting the market know that it is there.”
It was a challenging session for Asian currencies overall on weak China data and an uptick in U.S. Treasury yields. The offshore yuan dropped to 7.2930 to the dollar after a private sector survey showed China’s services activity expanded at the slowest pace in eight months in August.
Most Asian equity gauges slipped and futures indicated a slightly lower opening for U.S. shares. Indian stocks, however, inched up.
The dollar index was slightly higher and the 10-year U.S. yield rose to 4.21%.
“The short-term factor to watch out is the potential upward momentum in US long-term yields, which can again bring back the risk aversion and a break above 83 (for USD/INR),” said Srinivas Puni, managing director at QuantArt Market Solutions.
