Rupee Nears Record Low as Dollar Gains

The Indian rupee weakened to around 96.4 per dollar, hovering near record lows after trading flat in the previous session as a stronger US dollar, elevated US Treasury yields and high oil prices increased dollar demand. The dollar index climbed above 102, supported by weakness in the euro amid political and fiscal concerns in the euro zone, while 10 and 30 year US Treasury yields rose to fresh 24 year highs. Meanwhile, foreign equity outflows and persistent importer demand for dollar hedges continued to weigh on the currency, with Indian companies booking a record $77 billion in currency hedges in September, up more than 80% year-on-year. The Reserve Bank of India continued selling dollars to temper the rupee’s decline, although traders expect it to smooth the fall rather than defend a specific level.