The rupee plunged 58 paise to close at an all-time low of 81.67 against the US dollar as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit. Moreover, escalation of geopolitical risks due to conflict in Ukraine, a negative trend in domestic equities and significant foreign fund outflows sapped investor appetite, forex traders said.
At the interbank foreign exchange market, the local currency opened at 81.47, then fell further to close at an all-time low of 81.67 against the American currency, registering a decline of 58 paise over its previous close. Earlier, the rupee slumped 30 paise to close at 81.09, its previous record low. This is the fourth consecutive session of loss for the domestic unit, during which it has lost 193 paise against the American currency.
What The Economists Said:
“Another day of large gains for the dollar versus the rupee as it fell for the fourth day in a trot amid risk-averse sentiments and unprecedented strength in the greenback following Fed tightening and recession worries,” said Dilip Parmar, Research Analyst, HDFC Securities. Spot USD-INR may head towards 82 as strength in the dollar index continues with surging bond yields, Parmar said, adding that in the near-term, spot USD-INR is having resistance at around 82 and support at 81.05. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.46 per cent to 113.71.
Monetary Policy Challenges:
The 38th meeting of the Monetary Policy Committee, constituted under the Reserve Bank of India Act, will be held during September 28 – 30. According to experts, focus will now shift to RBI’s meeting this week, with its decision due on 30th Sept. Market will react accordingly.
Global oil benchmark Brent crude futures fell 0.70 per cent to USD 85.55 per barrel. On the domestic equity market front, the 30-share BSE Sensex dropped 953.70 points or 1.64 per cent to end at 57,145.22, while the broader NSE Nifty fell 311.05 points or 1.8 per cent to 17,016.30. Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 2,899.68 crore, as per exchange data. Meanwhile, the country’s forex reserves declined USD 5.219 billion to USD 545.652 billion for the week ended September 16.