By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee slipped on Thursday, weighed down by persistent corporate hedging demand but intermittent dollar sales by state-run banks kept the currency above its record low, echoing price action over recent weeks.
The rupee was hovering near 88.70 as of 11:20 a.m. IST, down modestly from its close at 88.63 on Wednesday. The currency had touched an all-time low of 88.80 on September 30.
Frequent market interventions by the Reserve Bank of India have solidified 88.80 as a ‘line in the sand’ against further weakness in the rupee in the near term, traders said.
Asian currencies nudged higher while regional equities were subdued. Sentiment was tempered by the White House’s warning that October employment and inflation data may not be published, despite the shutdown’s end.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 were up about 0.3% each, while the yield on the country’s benchmark 10-year bond ticked up to 6.503%.
India’s retail inflation slumped to a record low of 0.25% in October but failed to impress the bond market, as traders pointed to a steady core inflation reading at 4.4% year-on-year, which they reckon puts a rate cut by the RBI next month in doubt.
“The October print was likely the bottom in headline inflation. Our preliminary estimate for November headline inflation is 0.9% y/y,” analysts at Goldman Sachs said in a note. The firm expects the RBI to deliver a 25-basis-point rate cut in December.
Elsewhere, the Japanese yen fell to a record low versus the euro and hovered near a nine-month trough against the dollar after Japan’s new prime minister said she wanted the central bank to go slow on interest rate hikes.
(Reporting by Jaspreet Kalra; Editing by Rashmi Aich and Eileen Soreng)
