Indian rupee lingers around bottom of Asia FX pile as global headwinds deepen

The Indian rupee stayed near the bottom of Asian currencies over the July-September quarter, according to Business Recorder, as higher crude costs and rising global bond yields weighed on local assets. The currency lost 1.2 per cent in the quarter and 0.7 per cent over the month, with Reserve Bank of India interventions limiting the decline. It closed at 95.83 per dollar on Wednesday, stronger than the 95.98 of the previous session.

Brent prices moved between $70 and nearly $110 a barrel during the quarter as the on-off US-Iran conflict unfolded. Goldman Sachs analysts said higher oil prices could keep weighing on the current account, while stronger capital flows and the central bank's policy tools should keep the rupee within a range. A policy decision by the RBI next week is widely expected to include a 25 basis point hike.

Global bond yields rose to multi-year highs on inflation concerns tied to the Middle East war and worries about developed-market finances. The 10-year US yield rose 80 bps over the quarter, while Indian bond yields rose by only 40 bps. The benchmark Indian stock index fell 5 per cent, while MSCI's regional gauge rose about 1 per cent. Persistent RBI dollar sales kept the rupee from testing its record low of 96.96, and inflows of $143 billion were logged through September 18.