The rupee breached the psychologically significant level of 79 per dollar level for the first time ever on Wednesday, marking the sixth straight session of all-time weak closes as worries about elevated oil prices and inflation returned to the forefront and weighed on emerging market assets.
PTI reported that the rupee breached the 79 per dollar level, provisionally, on Wednesday. The report showed the currency depreciated 18 paise to a record low close of 79.03 per dollar, provisionally, weighed down by persistent foreign capital outflows driven by flight-to-safety bets.
Earlier in the session, the rupee opened weak at 78.86 against the greenback, then lost ground to end provisionally at 79.03 — its all-time low level.
During the session, the rupee touched an all-time low of 79.05 against the American currency, PTI reported. Bloomberg quoted the rupee’s intra-day low at 78.985 per dollar, within striking distance of the 79-to-a-dollar mark.
On Tuesday, the rupee had plunged by 48 paise to close at a record low of 78.85.
The currency has closed at a new record low in each of the previous six sessions, including its latest close on Wednesday.
The Reserve Bank of India has recently intervened in the markets to shore up the rupee.
But Reuters, quoting analysts and traders, reported that the RBI would need to change its strategy to ease the pressure on the rupee as the currency’s decline is being accelerated by its current intervention method in the futures market.
The rupee has hit a series of lifetime lows this month since breaching the 78-to-a-dollar rate as concerns around growth, portfolio outflows, high global crude prices, and sustained inflation have weighed on the currency.
The rupee depreciated following risk-averse sentiments and weaker regional currencies, Dilip Parmar, Research Analyst, HDFC Securities told PTI, and added “high demand and tighter dollar liquidity following quarter-end rebalancing weighed on a local unit(rupee)”.
The sentiment remains feeble for the rupee amid foreign fund outflows and fear of dollar shortages following quantitative tightening from the US Federal Reserve.
“The short-term outlook for spot USD/INR remains bullish and one can see a level of 79.10 in the coming days, while on the lower side support has been shifted to 78.38,” he said.