By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee hovered close to a record low on Tuesday, pressed by a fall in its regional peers, while mild dollar sales from state-run banks supported the currency which has remained subdued this month.
The rupee was at 84.0725 against the U.S. dollar as of 11:20 a.m. IST, nearly unchanged from its close at 84.06 on Monday.
The currency had slipped to an all-time low of 84.0750 in the previous session, after weakening below 84 for the first time last week.
The rupee is down by about 0.3% this month, but has fared better than its regional peers which have declined between 0.8% to 3% amid a rebound in the US dollar.
The dollar index was at 103.3 on Tuesday, its strongest level in over two months. Other Asian currencies were down between 0.1% and 0.8%.
Foreign banks were spotted bidding for dollars, likely on behalf of their custodial clients, a trader at a state-run bank said.
Sustained outflows from local equities have hurt the local currency this month, with foreign investors having pulled out about $8 billion so far.
Benchmark equity indices BSE Sensex and Nifty 50 were down about 0.2% each on Tuesday, diverging from gains in most other Asian equities.
In the near-term, the local currency is expected to trade between 83.90 and 84.10, said Amit Pabari, managing director at FX advisory firm CR Forex. “However, with the right mix of RBI intervention and favourable global trends, the rupee could inch back to 83.80.”
Meanwhile, dollar-rupee forward premiums dipped, with the 1-year implied yield down 1 basis point at 2.20% pressured by a rise in near-maturity U.S. bond yields. The 1-year U.S. Treasury yield was up 7 bps at 4.25% in Asia hours.
(Reporting by Jaspreet Kalra; Editing by Varun H K)
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