India's RBI likely sells dollars as surging U.S. yields hold rupee hostage - traders

BY Reuters | ECONOMIC | 09/28/22 12:21 AM EDT

MUMBAI, Sept 28 (Reuters) - The Indian central bank likely sold dollars via state-run banks on Wednesday as rising Treasury yields and mounting risk aversion pushed the rupee to a record low, traders said.

The rupee was trading at 81.8675 per U.S. dollar, down from 81.58 in the previous session. The local unit earlier reached a record low of 81.9350.

The intervention by the Reserve Bank of India was confirmed to Reuters by three bankers and a brokerage firm.

"There are two major state-run banks who are selling dollars," said one of the traders.

"It looks like they want to protect the 82 level for today." (Reporting by Nimesh Vora; Editing by Savio D'Souza)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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