Rupee Falls 20 Paise To Close at Fresh All-Time Low of 94.88 Against US Dollar
Mumbai: The rupee closed at an all-time low of 94.88 against the US dollar on Wednesday; Rising Brent crude oil prices are hovering around US$115 per barrel and are under pressure from ongoing foreign capital outflows. The rising price of crude oil will sharply impact India’s import costs, Forex traders said, while concerns about the ongoing West Asian crisis and potential wider conflict are adding to investors’ anxiety.
Analysts also said investors are waiting for clues about the U.S. Federal Reserve’s upcoming policy decision.
Moreover, intense foreign institutional investor (FII) sales so far this year have further damaged investor confidence.
The rupee, which opened at 94.79 against the dollar in the interbank foreign exchange market, lost value against the US dollar during the session and fell to 94.88. It eventually settled at 94.88, its lowest closing level ever, down 20 paise for the day.
On Tuesday, the rupee lost 53 paise to close at 94.68 against the US dollar.
The rupee’s all-time low closing level of 94.85 against the US dollar was recorded on March 27 this year. The unit hit its lowest ever intraday level of 95.22 against the dollar on March 30.
Dilip Parmar, Senior Research Analyst at HDFC Securities, said: “Indian rupee hit a record low close as rising crude oil prices and rising US dollar put pressure on the currency. Moreover, domestic liquidity remained tight as importer demand outstripped supply while the central bank remained on the sidelines. We see USD-INR trading with a positive bias between 94.10 and 95.15.”
According to Research Analyst Jateen Trivedi, Vice President, Commodity and Currency, LKP Securities, continued FII outflows and rising crude oil prices near US$114 (Brent) continued to put pressure on the local currency.
“The trend remains weak as the currency consistently faces selling pressure on recoveries, indicating a lack of strong support at higher levels. In the near term, 94.40 level is likely to act as resistance, while 95.25 remains the next key support, while the rupee is expected to remain volatile and driven by crude oil and capital flows,” Trivedi said. he said.
Meanwhile, the dollar index, which measures the strength of the dollar against a basket of six currencies, increased by 0.08 percent to 98.72.
Global oil reference Brent crude oil was traded at $114.74 per barrel, with an increase of 3.13 percent in futures.
Meanwhile, the United Arab Emirates announced on Tuesday that it will leave OPEC as of May 1, dealing a major blow to the global oil cartel.
In the domestic stock market, Sensex increased by 609.45 points to 77,496.36 points, and Nifty increased by 181.95 points to 24,177.65 points.
Foreign Institutional Investors sold shares worth Rs 2,468.42 billion on Wednesday, stock exchange data showed.
Meanwhile, growth in India’s industrial production fell to a five-month low of 4.1 percent in March, due to weak manufacturing growth and almost flat growth in the energy sector amid the West Asian crisis, official data showed on Tuesday.
Factory production measured in Industrial Pro Index
