(Reuters) - The Indian rupee slid towards a key level of 80 against the dollar on Wednesday, amid a selloff in Asian markets sparked by persistent weakness in the Chinese yuan.
The partially convertible rupee fell 0.1% to 79.9250 by 0445 GMT, as the dollar index climbed back to a 20-year high after strong U.S. services data made the case for the Federal Reserve continuing on its aggressive interest rate-hike path.
The yuan weakened towards 7 per dollar despite efforts by the People's Bank of China to revive the beleaguered currency, but data showing that the country's August exports missed estimates soured sentiment further.
However, the rupee held up better than its Asian peers. The Philippine peso hit a record low, while the Malaysian ringgit slumped to its lowest level in 24 years.
"There is an implicit understanding that the Reserve Bank of India doesn't want undue volatility and they can... support the 80 level. So that somehow has become a perceived resistance for the USD/INR pair," said Mandar Pitale, head of treasury at SBM Bank.
Several traders last week pointed to the central bank helping the rupee rebound from a record low of 80.12, whereas RBI Governor Shaktikanta Das said on Monday the bank aimed to anchor expectations around the currency and would intervene to prevent an overshoot.
Moreover, oil prices dropping to $92 per barrel should also help in arresting the rupee's slide, HDFC economists wrote in a note, expecting it to trade in the 79.70 to 80.0 range this week.