Rupee slips to record low, hurt by elevated NDF dollar demand, importer hedging

MUMBAI - The Indian rupee slipped to its lowest level on record on Wednesday, pressured by strong dollar bids in the non-deliverable forwards market and importer hedging.

The rupee declined to a record low of 83.9725 against the U.S. dollar, eclipsing its previous lifetime low of 83.96 hit on Tuesday.

The currency weakened despite likely intervention by the Reserve Bank of India (RBI) as it faced headwinds amid continued unwinding of carry trades that used the Japanese yen and the Chinese yuan to fund long bets on the rupee.

Heightened dollar demand from local importers also hurt the currency as it neared a psychologically important level of 84 per U.S. dollar, traders said.

State-run banks were offering dollars, likely on behalf of the RBI, but the intervention was not aggressive, a foreign exchange trader at a large private bank said.

The dollar index was up about 0.2% at 103.2 while Asian currencies were mixed.