INDIA RUPEE-Rupee Plunges as Fed Rate Hike Bets, Risk Aversion Supports Dollar

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By Anouchka Trivedi

MUMBAI, Oct 11 (Reuters) – The Indian rupee traded slightly lower on Tuesday as geopolitical tensions and expectations of sharp interest rate hikes by the U.S. Federal Reserve boosted the dollar, with a surge yields which further inflated the greenback.

The partially convertible rupee fell 0.1% to 82.40 at 0505 GMT. It had hit a record low of 82.6825 in the previous session but recouped all losses thanks to likely intervention by the Reserve Bank of India, traders pointed out.

The central bank is likely to have intervened on Tuesday, but not “as aggressively”, preventing the rupee from falling as much as its Asian counterparts, two traders said.

The return of oil prices to below $96 a barrel also helped the rupiah a bit, a trader said, adding that the currency could weaken to 83 and beyond around the Fed meeting next month. .

The dollar index jumped to 113.4 as concerns over rising interest rates and geopolitical tensions unsettled investors after a Russian missile attack on Ukraine killed civilians and cut off electricity and heating in some towns.

Asian stocks recorded heavy losses, while Indian stocks lost 0.3%.

Meanwhile, the yield on the US 10-year Treasury jumped to 4% as a rout in the UK gilt market created turbulence as pension funds feared they would be forced to sell burning assets due to of increased yields.

On the domestic market, investors are now looking to India’s retail inflation figures due on Wednesday, which are expected to have accelerated to a five-month high of 7.30% in September due to surging inflation. food prices, according to a Reuters poll. (Reporting by Anushka Trivedi in Mumbai; Editing by Dhanya Ann Thoppil)

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