Rupee closes at a record low
The rupee ended at a record closing low on Tuesday, as rising geopolitical tensions in the Middle East and worries that the Federal Reserve will delay interest rate cuts triggered a selloff in risky assets.
The rupee ended at 83.5350 to the US dollar, its weakest close on record, compared with 83.4500 in the previous session. The currency hit a lifetime low of 83.5475 on Tuesday but averted further losses on likely intervention by the central bank through state-run banks, traders said.
Indian financial markets will be closed on Wednesday.
“Given the heightened geoexpected political conflict in the Middle East region, investors will prefer to go long on the dollar and we may see the rupee touch fresh record highs,” Jigar Trivedi, senior research analyst currencies and commodities at Reliance Securities said.
The Reserve Bank of India is to intervene to curb the volatility since there are ample forex reserves available, he added.
Concerns that Israel could retaliate to Iran’s attack over the weekend hurt appetite for the rupee and other Asian currencies. Israel’s PM Benjamin Netanyahu summoned his war cabinet for the second time in less than 24 hours on Monday to weigh a response to Iran’s attack, Reuters reported citing a person in the government.
An Iranian deputy minister said that Iran’s response to any Israeli retaliation would come in ‘seconds, not 12 days’. Most Asian currencies dropped, with the Korean won and the Indonesian rupiah leading the losses. The dollar index rose to its highest level in nearly six months.