With the US dollar strengthening further due to global risk-off sentiment, the rupee fell 36 paise Wednesday to a historic low of 81.94 against the greenback.
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After opening weak at 81.90 , the rupee touched an intra-day low of 81.95 and a high of 81.80 per dollar, forex dealers said. On Tuesday, it had closed at 81.58 against the US dollar.
Domestic equity markets continued their slide, with the Sensex at the BSE closing at 56,598.28, down 509.24 points, or 0.89 per cent. The broader Nifty at NSE closed 148 points, or 0.87 per cent down at 16,858.60.
Foreign institutional investors offloaded Rs 2,772.49 crore of shares in the domestic capital market on Wednesday, as per the BSE’s provisional data.
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“The rupee has fallen today as the US Dollar Index has risen to around 114.36. We are seeing the index reaching to 115, which will be a 25-year high. After the last week’s rate hike decision of the Federal Reserve, there is an anticipation that more hikes are in offing,” Megh Mody, research analyst (commodities & currencies) at Prabhudas Lilladher, said.
He expects the rupee to take support of 82 and remain in the range of 82-80 a dollar. The Reserve Bank of India’s (RBI) also intervened in the spot market today to check the volatility in the local currency, dealers said. Over the last few sessions, the rupee’s movement was primarily driven the last week’s US Federal Reserve’s rate hike decision.
Motilal Oswal Financial Services forex and bullion analyst Gaurang Somaiya, said the US dollar got a double boost from the underlying strength of its own and also from the weakness of Euro and Pound.
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Since January this year, the domestic currency has fallen 9.8 per cent against the US currency.
Despite this depreciation, the rupee has outperformed other global currencies, as the RBI has been actively supporting the domestic currency by selling US dollars, experts said.
“In the short term, due to global risk-off sentiment, we can expect more pressure on the Indian rupee. It will be difficult for the RBI to continue selling US dollars aggressively any further, as the remaining forex reserves are around 9-10 months of import cover only,” said Aishvarya Dadheech, fund manager, Ambit Asset Management.
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Between mid-January and mid-September this year, the forex reserves have depleted by $90 billion. For the week ended September 16, 2022, the country’s foreign exchange reserves declined by $5.219 billion to $545.652 billion as against $634.97 billion in the week ended January 14.
