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  • Rupee plunges to intra-day low of 90.25 against US dollar
  • FII outflows, equity declines, and no India-US trade deal pressure currency
  • RBI rate decision on December 5 may further impact rupee

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Rupee slumps to all-time low of 90.25 against US dollar in intra-day trade

The Indian rupee plunged to a new intra-day low of 90.25 against the US dollar due to FII outflows, strong dollar demand by banks, and uncertainty over India-US trade talks.

Updated: Sep 02, 2022 10:53
|

PTI

Rupee slumps to all-time low of 90.25 against US dollar in intra-day trade

The rupee plummeted to a new low of 90.25 against the greenback in the intra-day session on Wednesday, falling 29 paise from its previous close, amid FII outflows and sustained buying of dollars by banks.

A decline in the domestic equity markets and the absence of an India-US trade deal put further pressure on the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened at 89.96 against the greenback and slipped to an all-time intra-day low of 90.25, down 29 paise from its previous close.

On Tuesday, the rupee settled 43 paise down at an all-time closing low of 89.96 against the US dollar, largely owing to continued short-covering from speculators and sustained importer demand for the American currency.

Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said, "The rupee slipped below the 90-mark for the first time, pressured by the absence of a confirmed India-US trade deal and repeated delays in timelines. Markets now want concrete numbers rather than broad assurances, leading to accelerated selling in the rupee over the past few weeks."

"Record-high metal and bullion prices have further worsened India's import bill, while steep US tariffs continue to strain export competitiveness," he said.

"The rupee has been weakening with the Government of India and the Reserve Bank of India (RBI) wanting to help exporters and may have kept the dollar well bid in the past few days," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. Nationalised banks purchased dollars at higher levels consistently on Tuesday, he said.

The MPC meeting starts on Wednesday and the interest rate decision will be declared on December 5 ahead of the Fed interest rate outcome on December 10. "A rate cut by the RBI could invite further selling of the rupee," Bhansali added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.18 per cent lower at 99.17. Brent crude, the global oil benchmark, was trading 0.03 per cent lower at USD 62.43 per barrel in futures trade.

On the domestic equity market front, Sensex was down intra-day by 277.23 points, or 0.33 per cent, to 84,861.04 points. Nifty, too, was trading lower by 111.70 points, or 0.43 per cent to 25,920.50.

Foreign Institutional Investors sold equities worth Rs 3,642.30 crore on Tuesday, according to exchange data.

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