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MUMBAI: The Indian rupee weakened on Wednesday tracking Asian peers. However, its losses were contained on concerns the central bank may intervene if the unit moves closer to record lows, traders said.

The rupee was at 83.2450 against the U.S. dollar as of 11:20 a.m. IST against a close at 83.2050 in the previous session. The rupee’s lifetime low of 83.29 was hit in October 2022.

Asian currencies weakened, with the Korean won leading losses.

The 10-year U.S. Treasury yield rose above 4.85% in Asia, its highest since August 2007.

The dollar index was little changed at 107 but remained close to its highest since November 2022, hit on Tuesday.

The Indian rupee fared better than its Asian peers on expectation the Indian central bank would intervene to defend the currency, traders said.

“No one is willing to test weaker levels,” a foreign exchange trader at a private bank said. Frequent interventions from the RBI have prevented the rupee from a falling to fresh record low.

In fact, expectations that RBI will step in to defend the rupee have become a bit of a “self fulfilling prophecy,” the trader added.

The RBI likely conducted one-week long USD/INR sell-buy swaps on Wednesday to limit the rupee’s weakness while keeping the liquidity impact in check, three traders said.

Equity-related outflows have also mounted pressure on the rupee in recent weeks.

Foreign investors sold over $2 billion worth of Indian equities in September, snapping a six-month buying streak. The RBI is unlikely to let the rupee depreciate sharply ahead of the monetary policy outcome on Friday, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.

All but one of the 71 economists polled by Reuters expect the RBI to keep its key repo rate unchanged.

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