The rupee weakened sharply to 79.65 against the dollar, a new intra-day record low, as the US currency jumped to a nearly two-decade high driven by increased safety bets on global recession fears.
Bloomberg quoted the rupee at 79.6375 against the greenback, after the currency hit an intra-day record weak low of 79.6537 a dollar.
That 79.65 odd per dollar rate is another intra-day all-time weak level, marking another new low in a series of lifetime weak rates hit in recent months.
PTI had earlier reported that the rupee was last changing hands at 79.58 per dollar after opening lower at 79.55 against the American dollar, a decline of 13 paise over its last close.
In initial trade, the local currency witnessed a high of 79.55 and a low of 79.62 against the US dollar, according to PTI.
The currency had dropped 19 paise to close at a record low of 79.45 against the US dollar, after settlements on Monday.
Now the rupee is only a hop, skip and jump away from a key psychological level of 80 per dollar.
“We could see 80 levels on the USD/INR very soon. The only force holding it back from falling there is the RBI. But with most other Asian currenices falling, we should get there sooner rather than later,” a senior trader at a private bank told Reuters.
Traders expect the Reserve Bank of India (RBI) to sell dollars via state-run banks to prevent runaway depreciation like it has in recent months, according to Reuters.
Asian currenices were all trading weaker against the dollar.
The capital exodus from assets denominated by almost any other currency and into the safe-haven greenback was evident as the dollar index, which tracks the currency against a basket of six peers, rose to 108.47, the highest since October 2002.
“Risk-off sentiment is dominating global markets,” Yuting Shao, Macro Strategist at State Street Global Markets, told Reuters.
“The dollar is the go-to international reserve currency. So when there is a recessionary risk or a pickup of volatility, the greenback is the currency people rush to because that is the safest,” the macro strategist added.
Reuters reported that investors’ focus will be on macro data, which includes India’s retail inflation reading this week, as well as the consumer price index from the United States on Wednesday.
A spike in inflation would keep central banks on the path of aggressive rate hikes.
Meanwhile, the Reserve Bank of India (RBI) unveiled a payment mechanism for international trade settlements in rupees, with prior approval for banks.The RBI’s move comes as the Indian rupee has touched a series of all-time lows amid continued foreign portfolio outflows from domestic stock markets and a broadly stronger greenback.