New Delhi: The rupee plunged by 33 paise to close at 83.04 (provisional) against the US dollar on Tuesday, tracking a strong American currency and higher crude oil prices.
Foreign fund outflows from the domestic equity markets also weakened the local currency.
At the interbank foreign exchange market, the local unit opened at 82.78 against the US dollar and finally settled at 83.04, registering a fall of 33 paise against its previous close. During the session, the local unit touched a low of 83.07 and a high of 82.78.
The rupee has breached the 83 level against the dollar for the fifth time since August 14.
On Monday, the rupee had settled at 82.71 against the dollar.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee depreciated due to the strong dollar and weak Asian currencies. “Weak global markets and disappointing macroeconomic data from India also weighed on the rupee.”
The US dollar strengthened on safe-haven demand amid risk aversion in global markets, while the rupee was under pressure after the latest survey showed India’s services activity index declined to 60.1 in August from 62.3 in July.
“We expect the rupee to trade with a negative bias on strong US dollar and elevated crude oil prices. Risk-off sentiments in global markets may also put downside pressure on the local currency.
“… any intervention by the Reserve Bank of India may also prevent a sharp fall in the rupee. USD-INR spot price is expected to trade in a range of Rs 82.60 to Rs 83.50,” Choudhary said.
Brent crude future, the global oil benchmark, was trading 0.66 per cent lower to USD 88.41 per barrel.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed by 0.38 per cent to 104.64.
“The rupee came under pressure and fell to the lowest level in two weeks as the dollar rose against its major crosses and on suspected dollar outflows on the domestic front. Major crosses also were under pressure as services PMI number released from the Eurozone came in below estimates,” Gaurang Somaiya, Forex and bullion analyst, Motilal Oswal Financial Services, said.
On the domestic equity market front, the 30-share BSE Sensex closed 152.12 points or 0.23 per cent higher at 65,780.26 points. The broader NSE Nifty advanced 46.10 points or 0.24 per cent to 19,574.90 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,725.11 crore, according to exchange data.
Jateen Trivedi, VP Research Analyst at LKP Securities, also attributed the depreciation to the overall strength of the US dollar and a significant increase in crude oil prices.
“Looking ahead, one of the key factors influencing the rupee’s movement will be the outcome of the Federal Reserve’s upcoming meeting later this month. The rise in the dollar index indicates expectations of an impending interest rate hike, and this is impacting currency markets, including the rupee.
“As for the rupee’s trading range, it is expected to be between 82.70 and 83.25, with a bias toward weakness, especially if it faces upward pressure. Traders and investors will closely monitor developments in the currency and oil markets, as well as any news related to the Federal Reserve’s policy decisions, to gauge the rupee’s future trajectory,” Trivedi said.
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