The Indian rupee came close to its record low Monday before recouping some of the losses, with the decline possibly leading to intervention by the central bank.
(Bloomberg) — The Indian rupee came close to its record low Monday before recouping some of the losses, with the decline possibly leading to intervention by the central bank.
The currency weakened as much as 0.3% to 83.0762, past the 83-per-dollar threshold for the first time since October, before paring the drop to 0.1%. The rupee tracked a broader decline among emerging market currencies, with others falling by a bigger extent.
The Reserve Bank of India is intervening in the market to prevent volatility, analysts including those at HDFC Securities, Mecklai Financial Services and Kotak Securities, said.
A rebound in Treasury yields from this year’s lows in April is hurting emerging-market currencies, as investors weighed the prospects that the Federal Reserve will keep rates higher for longer. The rupee though has been kept in a tight range through intervention by the Reserve Bank of India.
“The RBI won’t stand in the way if the dollar continues to appreciate globally,” said Anindya Banerjee, currency strategist at Kotak Securities. “But that doesn’t mean they will let the market decide the level for the rupee all on it’s own.”
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