The rupee on Wednesday hit a new record low of 82.95 against the dollar, reversing earlier gains in the session and on more signs that higher inflation will put major central banks in rate-hike mode, adding to the recent risk-asset rally. will do harm.
Bloomberg showed the rupee closing at its weakest at 82.8938 per dollar after opening at 82.3062 compared to its previous close of 82.362. The domestic currency fell to a new intra-day record low of 82.9450 against the greenback in a volatile trading session on Wednesday.
The rupee fell 61 paise below the 83 mark for the first time and temporarily closed at a new record low of 83.01 against the US dollar, PTI reported.
“Probably RBI buying USD in currency futures yesterday, indicating things to come, it was only at that point 82.40 would have been breached. Hence none of the levels looks sacred for the rupee. And so 83.50 should be the next target after 83.00. It has been breached,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
Traders at two private banks told Reuters that there was significant demand for the dollar by two public sector enterprises, which contributed to the rupee’s fall to a record low.
The rupee had attempted to consolidate the 82-mark at one point on Tuesday before ending the day at 82.36, with a fag-end selloff to close the domestic currency almost flat.
“Yesterday’s (Tuesday) session was another indication that the bias on the rupee is on a downside,” a trader at a Mumbai-based bank told Reuters.
The trader said that for a “durable and sound recovery” in the rupee, “reasonable certainty” would be required that the US yields were top-notch.
According to some bankers, Reuters said, the rupee’s fall from 82 levels on Tuesday was due to dollar demand from importers such as oil corporations.
Conversely, two others claimed that it was probably because RBI had bought USD/INR contracts before the expiry on Friday.
The domestic currency hit a new all-time low of 82.9450 when risk-averse assets reversed recent gains and fell as data showed skyrocketing food costs pushed British inflation back to a 40-year high of 10.1 per cent. Shipped, put pressure on the Bank of England. Raising rates aggressively.
On Wednesday, global stocks, which have risen in recent sessions, were marginally lower as investor sentiment remained conflicting amid positive corporate earnings results and fears of persistent higher inflation intensifying more aggressive policy tightening.