After offshore yuan hits a record low, the rupee may decline at open

Tuesday's opening of the Indian rupee against the dollar is anticipated to be slightly lower after the offshore Chinese yuan hit a record low.

The expected opening range for the rupee against the dollar is 82.74-82.76, down from Friday's 82.6750. Monday was a holiday for the Indian stock exchanges.

Tuesday saw a record low for the offshore yuan to the dollar at 7.3650 after the People's Bank of China's daily fix sparked rumors that the central bank could permit a market-determined exchange rate.

In contrast to a Reuters estimate of 7.1348, the PBOC placed the mid-point at 7.1668.

As a result of investors selling Chinese assets after President Xi Jinping's new leadership team stoked concerns that development will be sacrificed for ideology-driven policies, the yuan was already under pressure.

Equities in China and Hong Kong continued to decline on Monday. The main index in Hong Kong fell more than 6% on Monday.

The dollar index lost ground in Asian trading as a result of predictions that the US Federal Reserve will raise interest rates somewhat in December.

According to the Wall Street Journal on Friday, Fed policymakers are considering raising interest rates by 50 basis points in December and would like to prepare investors for such a decision in the weeks after the Federal Open Market Committee meeting in November.

The CME FedWatch Tool currently places the probability of a 50 basis point rate increase in December at roughly 55%.

Yuan aside, a trader at a Mumbai-based bank claimed that the rupee would have "had a decent opening" given the "somewhat less" hawkish Fed outlook.

The 1-month non-deliverable forward, he noted, had decreased to approximately 82.75 on Friday following the WSJ piece.

The trader noted that further decline in India's foreign exchange "is certainly another worry" for the rupee. The nation's foreign exchange holdings fell by $4.5 billion to $528.4 billion in the week ending October 14.