The rupee on Wednesday slipped to an all-time low of 95.80 against the US dollar, and settled at 95.67 near its record closing low level as the cumulative strain of elevated crude prices and West Asia geopolitical concerns offset hopes of lower demand for the US dollar due to import curbs.
Forex traders said possible RBI intervention and duty-led compression of gold imports helped moderate further weakness for the USD/INR pair, but the rupee was pressured by the trajectory of crude and the West Asia situation.
The rupee has become the worst-performing currency in Asia for the year, registering a loss of over 6 per cent so far this year, as elevated crude oil prices, a strong dollar and concerns regarding the West Asia crisis weighed on investor sentiments, traders said.
At the interbank foreign exchange market, the rupee opened at 95.52, registering a gain of 16 paise from its previous all-time closing low. In a highly volatile trade, the USD/INR pair witnessed an intra-day high of 95.51 and a low of 95.80 against the greenback before settling at 95.67 (provisional), up 1 paisa from its previous close. The rupee depreciated 40 paise to close at a fresh all-time low of 95.68 against the US dollar on Tuesday.
“On the rupee, USD/INR around 95.60 reflects the cumulative strain of elevated crude prices and the West Asia geopolitical premium. Active RBI intervention and the duty-led compression of gold imports should help moderate further weakness. The path of the rupee from here will be shaped less by gold and more by the trajectory of crude and the West Asia situation,” Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, said.
“We expect the rupee to trade with a negative bias amid rising crude oil prices, concerns over inflation and geopolitical tensions between the US and Iran. However, any intervention by the RBI may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 95.45 to 96.15,” Anuj Choudhary, Research analyst at Mirae Asset ShareKhan, said.
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