Rupee falls to all-time closing low of 70.59

MUMBAI: Caution ahead of key macro-economic data, coupled with volatile global crude oil prices and a rise in the demand for US dollars pulled the Indian rupee to a fresh low on Wednesday.

According to analysts, continuous outflow of foreign funds from the country’s equity markets also dragged the rupee lower.

On an intra-day basis, the Indian rupee plunged to 70.65-66—the lowest ever mark— against the greenback after it opened at the Interbank foreign exchange market at 70.31-32 and soon surpassed its record low of 70.40 to a greenback made on August 16.

It settled at a record closing low of 70.59-60 against the US dollar, weaker by 49 paise from Tuesday’s close of 70.10 to a US dollar.

“Weakness across emerging market currencies like Lira, Real, Ruble, Rand and Yuan, alongwith weakness in Euro has caused Rupee to depreciate. Rising oil prices is an added concern. RBI may have been an active seller on dollars in spot market as well as derivatives market,” said Anindya Banerjee, deputy vicepresident for Currency and Inter- est Rates with Kotak Securities.

“Over the near term we expect USD/INR to remain within a range of 70-71.20 on spot.”

Apart from global cues, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.

Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrips worth ₹1,415.87 crore whereas domestic institutional investors bought stocks worth ₹1,114.36 crore.

Besides, caution prevailed ahead of the release of India’s GDP and fiscal deficit data. The key macro-economic data points will be released on Friday.

“Factors like month-end US dollar demand from importers, increase in crude oil prices in the international market and caution ahead of key economic data on Friday pressurised the rupee,” Anand Rathi, Shares and Stock Brokers research analyst Rushabh Maru told IANS.

Meanwhile, the government on Wednesday said the Indian currency was expected to remain in the range of 68 to 70 during the year.

Economic affairs secretary Subhash Chandra Garg told the media that the depreciation in the rupee was due to some small mismatch in the demand and supply, which may go either way depending on the view taken by the operators. He said while foreign portfolio investors took some $9 billion from the country during the first three months of the current fiscal, net flow was at an equilibrium in July.

ACCORDING TO ANALYSTS, CONTINUOUS OUTFLOW OF FOREIGN FUNDS FROM THE COUNTRY’S EQUITY MARKETS ALSO DRAGGED THE CURRENCY LOWER