Rupee closes flat after brief dip to all-time low amid rising US yields
Updates with closing levels, analyst comment
By Nimesh Vora and Siddhi Nayak
MUMBAI, Oct 28 (Reuters) -The Indian rupee ended flat on Monday, after briefly dipping to a lifetime low, pressured by the U.S. 10-year yield climbing to its highest since late July.
The rupee INR=IN dropped to a record low of 84.0850 to the dollar in afternoon trade, slipping past the previous low of 84.0825 it had hit last week. The currency settled at 84.0775 compared to its close of 84.0800 on Friday.
The dollar index =USD inched past 104.50 and most Asian currencies fell.
The U.S. dollar and bond yields have been pushing higher on the back of rising odds of Donald Trump winning the presidential election and as data indicates the U.S. economy remains healthy.
On Monday, the Reserve Bank of India (RBI) likely sold dollars via public sector banks to support the rupee, like it has done multiple times over recent days, traders said.
"In the run-up to and immediate aftermath of U.S. elections, RBI's aim will be to curb volatility in rupee," A Prasanna, head of research at ICICI Securities Primary Dealership said in an interview to Trading India.
The RBI would prefer the rupee to mimic the broader trend among emerging market currencies but with low volumes, said Prasanna, who expects a depreciation bias to persist due to "flaky" capital flows.
Foreign investors have withdrawn $10 billion from India equity and debt markets in October, in the heaviest month of selling this year.
RBI's constant intervention has stamped out volatility in the rupee, which last week traded in the narrowest range in at least 10 years, according to LSEG data.
"The price action in spot (market) is solely dependent on the level the RBI is comfortable with," a trader with a private bank said.
"Even if the rupee hits a fresh low, the expectation is that the currency will be brought back in this very narrow range."
Reporting by Nimesh Vora and Siddhi Nayak; additional reporting by Shubham Batra; Editing by Sonia Cheema, Eileen Soreng and Mrigank Dhaniwala
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