Rupee weakens to nearly 2-week low

The Indian rupee closed weaker on Tuesday as the local unit slipped to the 83 level for the first time in nearly two weeks due to broad weakness in Asian currencies and likely dollar outflows.

The rupee ended at 83.04 against the US dollar, compared with 82.7475 in the previous session.

The Chinese yuan and other Asian currencies dropped after a sluggish data release from China renewed concerns about the country's economic growth trajectory.

The Korean won led losses among the Asian currencies, down by almost 1 percent. On the other hand, the dollar index was up 0.46 percent at 104.6.

Traders said dollar outflows were another reason for the rupee's weakness. While some traders cited corporate dollar outflows, others pointed to equity-related outflows.

Dollar demand from oil companies also exerted pressure on the rupee, a foreign exchange trader at a foreign bank said.

Meanwhile, the yield on the 10-year US treasury rose slightly to 4.21 percent in the Asia session, while the two-year treasury yield held steady at 4.90 percent after rising on Friday. US markets were closed on Monday on account of the Labour Day holiday.

Unless the rupee perches lower than its all-time low, it is unlikely to convincingly move in any one direction, said Anindya Banerjee, head of foreign exchange research at Kotak Securities.

"This is the deadzone for the (USD/INR) bulls," Banerjee said, referring to how the rupee has received the Reserve Bank of India's help around similar levels in the past to aid recovery in the local unit.

The rupee hit its record low of 83.29 in October 2022.