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Rupee plunges to all-time low of 81.67 against US dollar on heavy forex outflows

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Mumbai, Sep 26 (PTI) The rupee plunged 58 paise to close at an all-time low of 81.67 against the US dollar on Monday as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit.

Moreover, escalation of geopolitical risks due to conflict in Ukraine, a negative trend in domestic equities and significant foreign fund outflows sapped investor appetite, forex traders said.

At the interbank foreign exchange market, the local currency opened at 81.47, then fell further to close at an all-time low of 81.67 against the American currency, registering a decline of 58 paise over its previous close.

On Friday, the rupee slumped 30 paise to close at 81.09, its previous record low.

This is the fourth consecutive session of loss for the domestic unit, during which it has lost 193 paise against the American currency.

“Another day of large gains for the dollar versus the rupee as it fell for the fourth day in a trot amid risk-averse sentiments and unprecedented strength in the greenback following Fed tightening and recession worries,” said Dilip Parmar, Research Analyst, HDFC Securities.

Spot USD-INR may head towards 82 as strength in the dollar index continues with surging bond yields, Parmar said, adding that in the near-term, spot USD-INR is having resistance at around 82 and support at 81.05.

“Rupee fell to fresh all-time lows as the dollar strengthened across the board. The pound plunged further after the UK government announced huge debt-financed tax cuts,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Somaiya added that during the weekend, North Korea fired a ballistic missile towards the sea off its east coast. Political instability in China has disturbed the overall economic sentiment and is keeping the Chinese Yuan weighed down.

“We expect the USDINR (Spot) to trade sideways and quote in the range of 81.20 and 81.80,” Somaiya said.

According to Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas, the Indian rupee touched a record low on strong Dollar and weak domestic markets.

Dollar surged to fresh 20-year high of 114.527 amid weak global equities and sharp fall in riskier currencies such as the Pound.

“Pound fell to record low levels of around 1.035 per US Dollar after UK’s Finance Minister Kwasi Kwarteng announced tax cuts and increased borrowing which spooked markets. Markets tanked on worries over UK’s economic growth,” Choudhary said.

“We expect the rupee to trade on a negative note as deteriorating global risk sentiments may put downside pressure on the rupee. Weak global markets may lead to safe haven flows towards US Dollar,” Choudhary said.

Investors may remain cautious ahead of RBI’s monetary policy meeting towards the end of the month. RBI is expected to rise interest rates by 50 bps. “USDINR spot price is expected to trade in a range of Rs 80.50 to Rs 82.50 in the next couple of sessions,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.46 per cent to 113.71.

According to experts, focus will now shift to RBI’s meeting this week, with its decision due on Friday. The 38th meeting of the Monetary Policy Committee, constituted under the Reserve Bank of India Act, will be held during September 28 – 30.

Global oil benchmark Brent crude futures fell 0.70 per cent to USD 85.55 per barrel.

On the domestic equity market front, the 30-share BSE Sensex dropped 953.70 points or 1.64 per cent to end at 57,145.22, while the broader NSE Nifty fell 311.05 points or 1.8 per cent to 17,016.30.

Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 5,101.30 crore, as per exchange data.

Meanwhile, the country’s forex reserves declined USD 5.219 billion to USD 545.652 billion for the week ended September 16. PTI DRR ABM MR

This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.

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