Rupee sinks to historic low, Centre anxious

Indian Rupee breaches 73 mark, plunges to fresh all-time low

Federal Reserve Chairman Jerome Powell also stoked the surge in yields this week when he said the central bank could eventually boost its benchmark past the neutral level.

Khoon Goh, head of Asia research at ANZ Banking Group in Singapore said the mix of strong U.S. data and the Fed chair's comments bumped up the dollar and U.S. bond yields, putting downward pressure on Asian currencies.

On Wednesday, the rupee declined sharply lower against the United States dollar to close at a record 73.34, amid soaring crude oil prices. Indian bond yields spiked as prices fell.

The dollar strengthened against the Chinese yuan by 0.2% to 6.9 in the offshore market and touched a fresh 20-year high against the Indonesian rupiah.

It also called for strengthening domestic macro economic fundamentals noting the rising global headwinds including trade tension, rising crude oil prices and tightening global liquidity conditions.

India now imports more than two-thirds of its oil needs.

China's financial markets are closed for the week.

US Treasury yields jumped to multi-year peaks on Wednesday, with the 10-year yield reaching a seven-year high after Wednesday's robust data bolstered the case for the Fed to raise interest rates again in December and beyond. "The rupee hit yet another record low today and in the near term, it doesn't look like there's any respite coming". During April-June India's balance of payments slipped into deficit for the first time in six quarters.

Oil prices stood around four year highs on Thursday. India imports more than two-thirds of its oil needs.

A 25 basis point repo rate hike to 6.75 per cent would mean a 75 basis point rise since June, the steepest increase since the last tightening cycle, between September 2013 and January 2014, when India faced its worst currency crisis since the 1990s.

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