Rupee hits record low of 78.77, RBI intervenes to prevent depreciation
The rupee continued to be whipped by foreign capital outflows and rising crude oil prices. On Tuesday, the local currency plunged 43 paise to settle at a record low of 78.77 to the dollar.
While month-end demand for the greenback from oil companies played a part, experts feel the domestic unit could breach the 79-mark and fall up to 79.40, if the current trend continues.
At the inter-bank foreign exchange market, the rupee opened sharply lower at 78.52 against the previous close of 78.34 to the dollar and hit a day’s low of 78.84.
“The FII outflows and global risk aversion kept the investors on their toes as the selling from the emerging market intensified. The oil importers were also seen at the dollar buying side on the back of month-end flows. The elevated crude price further dented the sentiments for the Indian rupee,’’ IFA Global said.
After a hiatus, oil prices have begun to climb again as Opec members Libya and Ecuador are suspending production amid political unrest.
Besides, all eyes are on the G7 meeting for further cues as the member nations are contemplating a new set of sanctions, including a proposal to place a price cap on the imports of Russian oil. Brent crude was trading at over $117 per barrel, a gain of almost 1.75 per cent over the last close.
There was little to rejoice for the rupee as the FPIs continued to be sellers. Provisional data from the stock exchanges showed that they sold stocks worth Rs 1,244 crore Tuesday. So far during this calendar year, they have been net sellers to the tune of Rs 2.16 lakh crore.
Forex circles said that while the RBI was selling dollars through state-run banks — which prevented a massive depreciation of the currency — demand for the dollar remain strong.
Brokerage Emkay Global said allowing the rupee to gently weaken is the right strategy by the RBI.
• FPI sales continue
• Oil prices start rising. Affects currency
• RBI intervened to prevent depreciation
• Analysts see rupee falling below 79 to 79.40