The Indian rupee fell 29 paise to close at a record low of 94.05 (provisional) against the US dollar on Wednesday, as heavy foreign institutional investor (FII) outflows and ongoing geopolitical tensions in West Asia kept investors cautious.
Despite declines in global crude oil prices, a weaker greenback and positive sentiment in domestic equity markets, the local currency remained under pressure, forex traders said.
At the interbank foreign exchange, the rupee opened at 93.94 against the US dollar and traded in a range of 93.86–94.08 before settling at its all-time low of 94.05, down 29 paise from the previous close. On Tuesday, the rupee had dropped 23 paise to 93.76.
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“Markets were in risk-on mode, but the rupee continued to be sold against the dollar, with month-end demand keeping bids high despite gains in the stock markets and a declining dollar index. All risk assets were up as markets anticipated some agreement between the US, Israel, and Iran,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Bhansali added that the Reserve Bank of India (RBI) is expected to defend the 94 level during the current financial year, potentially supporting the rupee to 93.30–92.80. He said the currency is likely to trade in a range of 93.25–94.25 in the near term.
The dollar index, which measures the greenback against a basket of six major currencies, was down 0.17 per cent at 99.26. Brent crude futures were trading 4.33 per cent lower at USD 99.97 per barrel.
On the domestic equity front, the Sensex surged 1,205 points, or 1.63 per cent, to 75,273.45, while the Nifty gained 394.05 points, or 1.72 per cent, to 23,306.45.
Meanwhile, FIIs continued their selling trend, offloading equities worth ₹8,009.56 crore on a net basis on Tuesday, according to exchange data.
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