RBI intervention halts rupee's slide to record low, risks linger

The Indian rupee closed almost unchanged at 96.78 per dollar on Thursday, according to Business Recorder, as likely Reserve Bank of India intervention kept it away from its five-month-old record low. The currency stayed just below its all-time bottom of 96.96, set in May. Pressure came from higher oil prices and weak regional peers.

The currency has lost more than 7% against the dollar this year, one of the steepest falls in the region, driven by costly oil, higher developed market bond yields and thin capital inflows. Traders see little reason to be bullish despite repeated central bank support. Investors expect India's rate increase, the first in almost four years, to do little to halt heavy capital outflows.

Brent crude rose more than 4% to $104.3 a barrel as supply worries tied to the Middle East persisted, with more attacks on vessels in the Gulf and near the Strait of Hormuz. Asian currencies broadly weakened after Federal Reserve minutes flagged inflation as the main danger facing policymakers. ING said in a note that markets have already priced in a hawkish Fed, with a further 50bp increase expected next year, which it views as overly aggressive.