Rupee slides 8 paise to end at over 1-month low against dollar

The rupee slid by 8 paise to close at a more than one-month low of 74.14 against the US dollar on Wednesday, declining for a fourth session in a row due to month-end dollar demand and a stronger greenback in the global markets amid rising bond yields.

The rupee dropped to an intra-day low of 74.26, a level not seen since August 26, but suspected RBI intervention limited its losses.

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In the four trading sessions to Wednesday, the rupee has lost 50 paise or 0.68 per cent as the US bond yields firmed up on fears of tapering in bond purchases by the US Fed before the end of the year.

At the interbank foreign exchange market, the local currency opened lower at 74.18 and witnessed an intra-day high of 74.08 and a low of 74.26 against the US dollar in day trade.

"The Indian rupee depreciated amid strong dollar and muted domestic markets. Dollar gained strength on the back of a surge in US treasury yields. Yields are rising on expectation that the US Federal Reserve will start tapering its bond purchases before the end of the year and possibly begin raising interest rates next year," said Raj Deepak Singh, Head-Derivatives - ICICI Securities.

A jump in commodity prices has also fuelled the worries over short-term inflation pressures. Furthermore, investors remained vigilant ahead of speeches of major central banks across the globe to get hints on future monetary stance.

"Sharp downside was prevented on persistent FII inflows and as crude oil dipped from its high. Rupee may trade in the range of 73.90 to 74.40 in the next couple of sessions," Singh noted.

"The Indian rupee depreciated for the fourth successive session against the dollar, as a surge in long-term US Treasury yields deepened fears about outflows from the country's equity and debt markets," said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The unit had briefly weakened to 74.26 earlier in the session, the lowest since August 26, but pared some losses on exporter covering and rumours of the RBI's presence in the market, Iyer said. Risk appetite in the region remained weak as most Asian currencies ended weaker pressurised by a selloff in the US bond market.

Weakness of the local equity markets also weighed on the currency.

According to Dilip Parmar, Research Analyst, HDFC Securities, the fall in rupee was amid broad-based dollar demand and rise in crude oil prices.

"The selloff in global bonds cooled-off today with US 10-year yield came under 1.50 per cent which supported riskier assets to trim some losses," Parmar said.

The dollar remained in demand against major currencies following month-end demand, defensive tone and rising bond yields while the pound slumped to its lowest levels since January 11, Parmar added.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 93.82. Meanwhile, Brent crude futures, the global oil benchmark, declined 0.61 per cent to USD 78.61 per barrel.

On the domestic equity market front, the BSE Sensex ended 254.33 points or 0.43 per cent lower at 59,413.27, while the broader NSE Nifty declined 37.30 points or 0.21 per cent to 17,711.30.

Foreign institutional investors were net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 1,957.70 crore, as per exchange data.