MUMBAI — The Indian rupee slumped to a new low against the dollar on Friday before clawing back some of the losses on likely intervention by the Reserve Bank of India.
The rupee was trading at 80.9550 per U.S. dollar by 0520 GMT, down from 80.86 in the previous session.
The local currency had fallen to a record low of 81.2250 earlier in the session, prompting the RBI to intervene, three traders told Reuters.
“It was always going to be the case that at the slightest hint of RBI, we will see a quick move,” a spot rupee trader said. “Obviously, now the question will be how sustainable the intervention will prove.”
Asian currencies remained under pressure on worries over how high the Fed rate could go and the pace at which the central bank will get there. Investors shunned riskier assets for safe-haven dollar.
Fed officials’ rate projections indicate another 125 basis points hike over the next two meetings this year. There is now a high probability that in November the Fed will deliver a fourth straight 75 bps increase.
The 10-year Treasury yield is hovering above 3.70% and the 2-year is well above 4%. Asian shares dropped and futures pointed to more losses for U.S. equities after the S&P 500 Index dropped to their lowest in over two months. Indian shares were down about 1%.
Rupee forward premiums were marginally higher after slipping to over 10-year lows in the previous session. (Reporting by Nimesh Vora; Editing by Saumyadeb Chakrabarty)