Published 10:43 IST, August 2nd 2024

Rupee averts record low on likely RBI intervention as local equities slide

US stock futures also extended their declines, with Nasdaq futures down 1.3%.

Reported by: Thomson Reuters
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Rupee nearly flat | Image: Republicworld
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The rupee was nearly flat on Friday as likely intervention from the Reserve Bank of India helped the currency hold above its all-time low amid pressure from weakness in local equities, which declined tracking a sell-off in global peers.

The rupee was at 83.7225 against the US dollar as of 10:35 a.m. IST, nearly unchanged from its close at 83.7175 on Thursday.

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Benchmark Indian equity indexes, the BSE Sensex and Nifty 50 were down about 1 per cent each, tracking a sell-off in global peers.

US stock futures also extended their declines, with Nasdaq futures down 1.3 per cent while S&P 500 futures fell by 0.7 per cent.

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Dollar bids from at least two large US-based foreign banks, likely on behalf of custodial clients, pressured the rupee in early trading, a foreign exchange trader at a private bank said.

The RBI likely sold dollars via state-run banks to support the local currency as it hovered close to its all-time low of 83.7450, traders said.

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Concerns about geopolitical tensions and a slowdown in the US economy, in light of data that signalled an unexpected slump in US manufacturing activity last month, drove US bond yields lower.

The 10-year US Treasury yield hit a six-month low of 3.94 per cent in Asia trading while the dollar index was at 104.3. Asian currencies were mostly up by 0.1 per cent to 0.8 per cent.

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"A return to broad-based USD weakness is still possible this month... but the (the dollar index) still needs to break below 104 first," DBS Bank said in a note.

Meanwhile, dollar-rupee forward premiums rose with the 1-year implied yield up 4 basis points at 1.91 per cent, its highest level in six months, lifted by the decline in US bond yields.

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10:43 IST, August 2nd 2024