Rupee plummets past 94/USD level; settles 33 paise lower
The rupee extended its losing streak for the fourth consecutive session, settling 33 paise lower at 94.11 (provisional) on Thursday and breached the 94-level for the second time in a month amid soaring crude oil prices as West Asia peace talks moved to an uncertain trajectory.
Massive selling of domestic equities and incessant withdrawal of foreign funds amid rising worldwide demand for the American currency further weighed on the domestic unit, which has lost over 1 per cent in a week, forex traders said.
At the interbank foreign exchange market, the rupee opened at 94.03 and hit an intra-day low of 94.17 against the greenback. It also touched the day’s high of 93.98 before ending at 94.11 (provisional) against the US dollar, logging a loss of 33 paise from the previous closing level.
The rupee declined 34 paise to settle at 93.78 against the US dollar on Wednesday, the third straight day of fall. In the past four sessions, the domestic unit has lost 120 paise, or nearly 1.3 per cent, since the closing level of 92.91 recorded on April 17.
Facing geopolitical headwinds triggered by the war in West Asia that began on February 28, the domestic currency breached the crucial 94-a-dollar level for the first time on March 23 and reached its lowest-ever intra-day level of 95.22 on March 30.
However, the rupee had recovered since then, following a slew of measures from the Reserve Bank of India.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was 0.12 per cent higher at 98.53. Brent crude, the global oil benchmark, was trading 1.88 per cent higher at $103.83 per barrel in futures trade.
According to Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, the rupee fell for the fourth consecutive day and breached the 94-mark, taking cues from weak domestic markets and a strong dollar.
“Surge in crude oil prices, too, weighed on the rupee. Global market sentiments deteriorated amid uncertainty over US-Iran talks,” Choudhary said and projected the USD-INR spot price “in a range of Rs 93.80 to Rs 94.50.”
In the domestic equity markets, the 30-share Sensex crashed 852.49 points, or 1.09 per cent, to settle at 77,664.00, while the Nifty tanked 205.05 points, or 0.84 per cent, to 24,173.05.
Foreign Institutional Investors offloaded equities worth about Rs 2,078.36 crore on Wednesday, according to the exchange data.
V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said, “The fundamental factor behind the rupee’s weakness is the rising current account deficit caused by high crude prices and the sustained FPI outflows from India. So long as these factors remain the same, the rupee will remain weak, and if crude price rises again due to escalation of the conflict, the rupee will depreciate further.”
Prospects of global trade through the Strait of Hormuz remained uncertain following Iran’s attack on three ships on Wednesday after the US began imposing a sea blockade of Iranian ports last week. President Donald Trump has extended a ceasefire even as negotiations for a truce in West Asia remained stalled.
