INR weakens to nearly 2-week low amid dollar outflows

September 05, 2023 (MLN): The Indian rupee closed weaker on Tuesday as the local unit slipped to the 83 level for the first time in nearly two weeks due to broad weakness in Asian currencies and likely dollar outflows, as Reuters reported.

The rupee ended at 83.04 against the U.S. dollar, compared with 82.7475 in the previous session.

The Chinese yuan and other Asian currencies dropped after a sluggish data release from China renewed concerns about the country's economic growth trajectory.

The Korean won led losses among the Asian currencies, down by almost 1%. On the other hand, the dollar index was up 0.46% at 104.6.

Traders said dollar outflows were another reason for the rupee's weakness. While some traders cited corporate dollar outflows, others pointed to equity-related outflows.

Dollar demand from oil companies also exerted pressure on the rupee, a foreign exchange trader at a foreign bank said.

Meanwhile, the yield on the 10-year U.S. treasury rose slightly to 4.21% in the Asia session, while the two-year treasury yield held steady at 4.90% after rising on Friday. U.S. markets were closed on Monday on account of the Labor Day holiday.

Unless the rupee perches lower than its all-time low, it is unlikely to convincingly move in any one direction, said Anindya Banerjee, head of foreign exchange research at Kotak Securities.

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