Rupee slips sharply as hopes of US Federal Reserve rate cut in Dec fade

The rupee approached a record low, pressured by a stronger US dollar as traders pared bets on a December rate cut by the Federal Reserve, and as the local central bank was not seen stepping in to support the currency.

 

The rupee weakened as much as 0.56 per cent, the most since August 29, to 88.70 per dollar on Thursday, closing in on its September record of 88.8050. Earlier this month, the Reserve Bank of India was alarmed to see the rupee nearing that level and sold dollars to stabilise it, said a person familiar with the matter.

 

“Most Asian currencies have weakened after the Fed cast doubts on a December rate cut, but the rupee has taken a bigger beating in the absence of strong central bank dollar sales in the spot market today,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors. Rupee also faced pressure from dollar demand linked to the central bank squaring off certain positions in the non-deliverable forwards market, he added.