MUMBAI: The Indian rupee hit fresh lows against the dollar on Friday before paring back losses on possible intervention by the Reserve Bank of India.
The rupee was trading at 80.9550 per US dollar by 0520 GMT, up from 80.86 in the previous session.
The local currency fell to a record low of 81.2250 earlier in the session, prompting the RBI to intervene, three traders told Reuters.
“It was always the case that at the slightest hint from the RBI, we would see a quick move,” said a spot rupee trader. “Obviously, the question now will be how sustainable the intervention will prove to be.”
Indian rupee to fall further after hitting record low, RBI key
Asian currencies remained under pressure due to concerns about how high the Fed rate could go and how the central bank would pace there. Investors shun riskier assets for the safe-haven dollar.
Fed officials’ rate projections suggest another 125 basis point hike at the next two meetings this year. It is now likely that the Fed will deliver a fourth consecutive 75 bps hike in November.
The 10-year Treasury yield is above 3.70% and the 2-year is above 4%.
Asian shares fell after the S&P 500 index fell to a two-month low and futures pointed to further losses for US equities.
Indian shares were down about 1%. The rupee’s forward premium was marginally higher after slipping to a 10-year low in the previous session.