Rupee near all-time low, RBI intervention expected to limit losses

The Indian rupee is likely to hover near its all-time low at open on Friday, unable to benefit from a drop in US bond yields, with traders expecting intervention from the Reserve Bank of India to continue limiting the currency's losses.

Non-deliverable forwards indicate rupee will open at around 83.73-83.74 against the US dollar, marginally weaker than its close at 83.7175 in the previous session.

The rupee had declined to its all-time low of 83.7450 on Wednesday.

The local currency has stayed under pressure for the majority of the last two weeks due to equity-related outflows and a prevailing bias towards steady depreciation. The decline came despite positive cues such as the Federal Reserve's signalling a likely interest rate cut in September.

The dollar index was at 104.39 after rising nearly 0.3 per cent on Thursday, as concerns about geopolitical tensions gave it a safe-haven boost and also helped drive US bond yields lower.

The 10-year US Treasury yield declined to a six-month low of 3.94 per cent in Asia trading with a surprise weakness in US manufacturing data sparking concern that the economy could be on course for a hard landing.

The rupee appears to be "headed lower steadily," with a strong local appetite to buy dollars limiting gains while the Reserve Bank of India's interventions keep sharp declines at bay, a foreign exchange trader at a state-run bank said.

"We expect the (Indian) central bank to continue to intervene and hence keep FX volatility at decadal lows," MUFG Bank said in a note.

Asian currencies were mixed on Friday, with the Korean won down nearly 0.5 per cent, while the offshore Chinese yuan and the Thai baht gained slightly.

Investors will pay close attention to a key US jobs report due later on Friday alongside remarks from Fed policymakers.