Rupee faces moment of truth ahead of possible Fed lift-off

Mumbai

INDIA'S rupee is feeling the heat as the Federal Reserve looks set to raise interest rates for the first time in a decade.

The currency, touted as Asia's most resilient to a US rate increase by Australia & New Zealand Banking Group Ltd, has extended declines in December after weakening 2.1 per cent last month in the region's worst performance. Rising odds of a Fed lift-off as early as Wednesday saw global funds cut holdings of Indian bonds and stocks by US$2.6 billion since Oct 31.

Policymakers are seeking to avoid a repeat of 2013, when the Fed's signal to end its unprecedented bond purchases sent the rupee tumbling to a record 68.845 a dollar in August that year. Traders say the Res…