Rupee falls to record closing low, sidesteps Asia FX rally on local dollar demand

economictimes.indiatimes.com:

rupee fell to its record closing low on Tuesday as persistent local demand for the U.S. dollar weighed on the unit despite a rally in Asian currencies.

The rupee ended at 83.3550 against the U.S.

dollar, slightly weaker than its close at 83.34 in the previous session.

The dollar index was last quoted lower at 103.32 and was hovering close to its weakest level in nearly four months. Asian currencies jumped led by the offshore Chinese yuan, which rose over 0.3%.

The dollar has retreated on expectations that the U.S.

Federal Reserve is likely to start easing policy rates from May next year.

But the rupee has remained under pressure and is hovering close to its lifetime low. The rupee's lifetime low of 83.42 was hit on November 10.

While importers, including local oil companies, have been soaking up the greenback, exporters aren't too keen to sell at current levels, traders said.

This has contributed to keeping the rupee in a tight range and the unit is unlikely to gain much on dollar weakness in the near-term, a foreign exchange trader at a state-run bank said.

The rupee has also lagged behind its Asian peers in November. While the Thai bhat and the offshore Chinese yuan are up by nearly 3% in the month so far, the rupee has weakened slightly.

The rupee is expected to remain in a lacklustre range in the near-term but December could spark some volatility due to year-end dollar demand, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.

Investors now await the minutes of the Fed's October meeting, due later on Tuesday, which could offer guidance on how well-placed market expectations are on the future of U.S.

policy rates. (Reporting by Jaspreet Kalra; editing by Eileen Soreng)