MUMBAI, April 16 (Reuters) – The Indian rupee ended at a record closing low on Tuesday, as rising geopolitical tensions in the Middle East and worries that the Federal Reserve will delay interest rate cuts triggered a selloff in risky assets.
The rupee ended at 83.5350 to the U.S. dollar, its weakest close on record, compared with 83.4500 in the previous session. The currency hit a lifetime low of 83.5475 on Tuesday but averted further losses on likely intervention by the central bank through state-run banks, traders said.
Indian financial markets will be closed on Wednesday.
“Given the heightened geopolitical conflict in the Middle East region, investors will prefer to go long on the dollar and we may see the rupee touch fresh record highs,” Jigar Trivedi, senior research analyst – currencies and commodities at Reliance Securities said.
The Reserve Bank of India is expected to intervene to curb the volatility since there are ample forex reserves available, he added.
Concerns that Israel could retaliate to Iran’s attack over the weekend hurt appetite for the rupee and other Asian currencies.
An Iranian deputy minister said that Iran’s response to any Israeli retaliation would come in ‘seconds, not 12 days’.
Most Asian currencies dropped, with the Korean won and the Indonesian rupiah leading the losses.
The dollar index rose to its highest level in nearly six months, while Asian equities fell.
Bets of delayed policy easing by the Fed were reinforced following strong retail sales data in the U.S.
The 10-year Treasury yield was trading near five-month highs on expectations a rate cut in unlikely this quarter.
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Reporting by Siddhi Nayak; Editing by Mrigank Dhaniwala
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