UAE: Indian rupee drops against dirham in early trade

The Reserve Bank of India is widely expected to not allow the rupee to dip below the 22.75 mark

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Published: Thu 30 May 2024, 10:05 AM

The Indian rupee — having opened weak on Thursday on worries over the rise in US Treasury yields — received help from dollar offers from public sector banks.

The South Asian currency was at 83.4150 to the US dollar (22.729 against the UAE dirham) at 9.10am, UAE time, having opened at 83.42 (22.73), and compared with 83.3450 (22.71) in the previous session.

Public sector banks are on the offer on the dollar/rupee pair, a foreign exchange salesperson at a large bank said.

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"I do not know for sure if the mild offers are for the RBI (Reserve Bank of India) or for their clients," he said. "If it is for the RBI, the intent is not to hammer it (dollar/rupee) down."

Currency traders, accustomed to regular RBI intervention, expect the central bank to step in at specific levels. The RBI is widely expected to not allow the rupee to dip below the 83.50 handle.

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Other Asian currencies were down much more with the Korean won slipping nearly 1 per cent and the Indonesian rupiah and the Thai baht shedding 0.4 per cent.

A further upward move in US Treasury yields, attributed to concerns over the demand-supply mismatch, pressured Asian currencies and dented demand for risk assets.

The 10-year U.S. Treasury yield has climbed 16 basis points in two days following two weak auctions.

Thursday's decline, if it holds up, will be the fourth day of losses for the rupee.

US yields, anxiety over the outcome of Indian elections, importers deciding to take a safety-first approach and exit of short (dollar) positions were cited by a currency dealer at a bank as reasons for the rupee's recent decline.


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