Dollar at new low against dollar, but less than at Asian peers

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Dollar at new low against dollar, but less than at Asian peers

The dollar was at a new low against the dollar on Wednesday, though the fall was less than at its Asian peers', as the relentless surge in Treasury yields and the dollar index showed no signs of letting up.

The rupee was trading at 81.94 per US dollar, down from 81.58 in the previous session. It reached a new low of 81.95.

It is the fourth time in five sessions that the local unit has notched up its worst level against the dollar, falling to almost 82 from 80 in a short space of a week.

The Reserve Bank of India has been selling dollars as a way to manage the volatility and the pace of the rupee's fall, traders have said. Estimates of how much the RBI has sold recently range from $1.0 - $1.8 billion per day.

Srinivas Puni, managing director at QuantArt Market Solutions said that the INR is now firmly on the depreciation path, with just the pace of the move uncertain.

An 82.50 -- 83.00 range looks possible for now, but an outsized move in the next year remains a possibility, though with a small probability. The rupee's decline on Wednesday was less than that of other major Asian currencies, likely due to the RBI's intervention.

The Korean won, the offshore Chinese yuan, the Thai baht and the Indonesian rupiah were all down 1% to 1.2%.

Inflation concerns and the pace of the Federal Reserve monetary tightening pushed the 10-year Treasury yield above 4% for the first time in more than a decade, pushing Asian currencies and hurting risk appetite.

The dollar index was up to 114.78 on Wednesday, a new twenty-year high.

Indian shares extended losses with the BSE Sensex falling to its lowest since July. The price of crude oil was close to $86, and the price was not changed.