The rupee slumped to a 10-month low to the dollar at 83.07 on Monday before an intervention by the Reserve Bank of India yanked the Indian currency up to 82.95, still a 10-paise drop over its previous close of 82.85.

The rupee fell on account of a stronger dollar and a rise in US yields along with the firming up of crude oil prices.

The domestic currency breached the 83-mark during the day to hit 83.07, a level not seen since October 20, 2022. Dollar sales from state-run banks at the behest of the RBI led to a claw-back of some of the losses.

At the inter-bank foreign exchange market, the rupee opened at 83.04 to the dollar. This was on account of the US currency’s global strength as reflected in the dollar index (DXY), a gauge which weighs the greenback against a basket of six currencies.

The DXY rose above the 103-mark to touch a high of 103.46 compared with its previous close of 102.84.

Moreover, yields on the 10-year US treasury advanced to 4.21 per cent from the last finish of 4.17 per cent. A rise in US yields is generally seen as negative for the rupee since it could increase dollar inflows towards American debt papers.

Analysts said the weakness in the stock markets put more pressure on the rupee.

Provisional data from the bourses showed that foreign portfolio investors (FPIs) were net sellers to the tune of Rs 2,300 crore on Monday.

According to Anuj Choudhary, research analyst at Sharekhan by BNP Paribas, the rupee fell on weak domestic markets and a strong US dollar.

The dollar gained after US PPI (producer price index) data was higher than forecasts for July along with safe haven demand on risk aversion in global markets. “We expect the rupee to trade with a negative bias on risk aversion in global markets and rising US dollars. FII outflows may also weigh on the rupee,’’ he noted.

Forex circles said the intervention from the RBI has shown the central bank will not allow a sharp depreciation below the 83 level. The rupee had touched an historic low of 83.26 in October 2022.

Stocks recover

Stocks witnessed volatility on Monday amid weak global cues and continued selling from overseas investors.

The 30-share BSE Sensex ended with gains of 80 points helped by Reliance Industries and Infosys, after suffering a loss of more than 500 points during intra-day trades.

The gauge oscillated nearly 700 points between the high and low points of the day.

The Sensex climbed 79.27 points or 0.12 per cent to settle at 65401.92. During the day, it fell 500.77 points or 0.76 per cent to 64821.88.

The NSE Nifty gained 6.25 points or 0.03 per cent to end at 19434.55.

Trading will resume on Thursday after a two-day holiday.