 | « Back to article | Print this article |
The rupee tumbled 19 paise to close at a fresh lifetime low of 77.93 against the US dollar on Friday as rising crude oil prices and unabated foreign capital outflows soured sentiment.
A sell-off in equity markets and stronger greenback overseas also weighed on the domestic unit, forex traders said.
At the interbank foreign exchange market, the local currency opened at 77.81 and witnessed an intra-day high of 77.79 and a low of 77.93 against the US dollar.
The local unit finally settled at its all-time low of 77.93, down 19 paise over its previous close of 77.74.
"The Indian rupee dropped to a record low amid risk-averse sentiment, weaker macro data and a stronger dollar index.
"The rupee marked the new record low... as the central bank remains aside from intervening while importers rush for dollars," said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar further noted that the global central banks' overriding need to fight inflation with higher interest rates remains a headwind for risk assets and favours the dollar bulls.
"On the domestic front, spot USD-INR is expected to consolidate in the range of 77.50 to 78.30 with a bullish bias," he said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.20 per cent to 103.43.
Brent crude futures, the global oil benchmark, advanced 0.51 per cent to $123.70 per barrel.
The basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen.
The Indian basket on June 9 touched $121.28, matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC).
On the domestic equity market front, the BSE Sensex ended 1,016.84 points or 1.84 per cent lower at 54,303.44, while the broader NSE Nifty tanked 276.30 points or 1.68 per cent to 16,201.80.
Continuing their selling spree, foreign institutional investors offloaded shares worth a net Rs 3,973.95 crore on Friday, as per stock exchange data.
"Rupee hit its fresh all-time low but in the last few sessions has been very resilient and is consolidating in a narrow range despite volatility in domestic and global equities and strength in the dollar against its major crosses," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
On the domestic front, the RBI has been very actively intervening and curtailing the volatility for the rupee.
Global crude oil prices have been rallying, thereby putting pressure on inflation and leading to higher trade deficit, he noted.
Dollar is getting support at lower levels ahead the Federal Open Market Committee (FOMC) policy statement that is scheduled next week.
Expectation is that the Fed could continue to raise rates and maintain its hawkish stance.
"We expect the USD-INR (spot) to trade with a positive bias and is gradually headed towards 78.50 levels. On the downside, 77.20 will continue to act as an important support in the short-term," Somaiya added.