Rupee falls 17 paise to hit all-time low of 83.61 against US dollar

The rupee plunged 17 paise to hit its lowest level of 83.61 against the US dollar for the second time in four weeks on Tuesday, tracking negative equity markets and a strong greenback against major crosses overseas amid geopolitical tensions.

Forex traders said a weak appetite for riskier assets and sustained outflow of foreign capital also dragged down the local unit.

At the interbank foreign exchange market, the local unit opened at 83.51 and finally settled at the lowest level of 83.61, registering a loss of 17 paise from its previous close.

Earlier the rupee had closed at the same level on March 22 this year.

On Monday, the rupee declined 6 paise to settle at 83.44 against the US dollar.

According to Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas, the 10year US bond yields rose to 4.66 per cent, the highest since November 2023. Weak domestic markets and simmering geopolitical tensions too weighed on the rupee.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02 per cent higher at 106.23. The US dollar rose to a five-month high, following weak yuan, retail sales and safe-haven demand amid Iran-Israel tensions,

Choudhary added. Brent crude futures, the global oil benchmark, declined 0.40 per cent to USD 89.74 per barrel.

"We expect the rupee to remain weak amid ongoing geopolitical uncertainties which could impact risk currencies and a surge in the US dollar. Rising global crude oil prices and a surge in US treasury yields amid expectations of a delay in rate cut in the US may also pressurise the rupee.

"Any further escalation would strengthen the dollar, while any signs of de-escalation would lead to some easing. Traders may take cues from building permits; housing starts and industrial production data from the US. USD/INR spot price is expected to trade in a range of Rs 83.30 to Rs 83.80," Choudhary added.

Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said: "...Indian rupee is expected to weaken more towards 83.75 as risk aversion in world markets, strength of US dollar and higher US yields as also FPI buying of US dollar and finally Middle East anxiety still brewing would keep rupee more towards weakness then strength in coming days."