Indian rupee fell near record low against the US dollar on Tuesday on the back of steady outflows from the domestic equity market.

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At 12:25PM, the rupee was trading at 74.16 a dollar, down 8 paise, from its Monday’s close of 74.07. The home currency opened at 73.85 and touched a high and a low of 73.85 and 74.22 a dollar, respectively.

The home currency opened higher on the back of weakness in US dollar. The greenback shed 0.2 percent to 113.04 yen on Tuesday. Against a basket of its rivals, the greenback was steady at 95.774, not far off a seven-week top of 96.127 hit last week.

Rupee on Monday slumped by 30 paise to finish at a fresh lifetime low of 74.06 against the US dollar amid steady capital outflows.

The rupee is the worst performing emerging market currency having lost almost 15 percent since January this year. Between April and September the rupee has plummeted more than 7 to the dollar.

Rising US interest rates and bond yields have encouraged investors to pull out funds from emerging markets to pocket better returns, analysts said.

So far this year, foreign investors have sold $2.74 billion and $7.33 billion in the equity and debt markets, respectively.

Manish Wadhawan of HSBC India is expecting to see some stability in rupee and bond markets going forward.

“We expect bond yield to stabilise between 8 percent and 8.15 percent in October-December quarter,” he said.

Talking about the RBI’s decision to not raise interest rates, Wadhawan said, “They have not hiked the rates but they have changed the stance. So it is not something that it has been a dovish policy so one has to take it with a pinch of salt and balanced view.”

In debt markets, the yields on the 10-year government bonds rose 0.66 percent to 8.03 percent after closing at 7.97 percent on Monday. Bond yields and prices move in opposite directions.

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First Published:Oct 9, 2018 9:36 AM IST