The rupee recorded the steepest single-day fall in more than three months, breaching the 89-dollar mark for the first time and closed the session 93 paise lower at 89.61 against the greenback on Friday amid negative cues from domestic and global equity markets triggered by trade-related uncertainties.
Forex analysts attributed the sharp fall in Indian currency to the massive selling of global IT stocks in the backdrop of risk-off sentiment and lack of clarity over the proposed India-US trade deal.
At the interbank foreign exchange market, the rupee opened at 88.67 and plunged to hit its lowest-ever intra-day level of 89.65 before ending the session at 89.61 against the American currency. On Thursday, the rupee depreciated 20 paise to close at 88.68 against the US dollar.
The unit had recorded its previous all-time intra-day low of 88.85 on September 30. The previous lowest closing level was registered at 88.81 against the US dollar on October 14.
Earlier, the Indian currency had witnessed such a steep fall during intra-day on July 30 when it lost 89 paise. The global risk-off sentiment has spilled into currency markets after a sharp overnight sell-off in cryptocurrencies and AI-linked technology stocks.
"The sudden unwinding of risk trades is weighing on emerging-market currencies, including the Indian rupee. Adding to the pressure is the lingering uncertainty around the proposed India-US trade deal, which markets had hoped would offer clarity on the bilateral economic outlook.
RBI Governor Sanjay Malhotra had said on Thursday that the central bank does not target any level for the rupee, and the recent depreciation of the domestic currency against the US dollar is primarily due to trade uncertainties following the imposition of tariffs by the US administration. He had also expressed confidence that India would secure a favourable trade deal with the US, which would help ease the pressure on the current account.
Meanwhile, foreign institutional investors bought equities worth Rs 283.65 crore on a net basis on Thursday. The dollar index, which gauges the greenback's strength against a basket of six currencies, was 0.09 per cent up at 100.17.
Also read: Depreciation due to demand for US dollar: RBI Governor
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