The rupee plunged by 35 paise to close at 83.06 (provisional) against the U.S. dollar on Tuesday, amid a strong American currency and higher crude oil prices.
Foreign fund outflows from the domestic equity markets also weakened the local currency.
At the interbank foreign exchange market, the local unit opened at 82.78 against the U.S. dollar and hit the lowest level to settle at 83.06 (provisional) against the greenback, registering a fall of 35 paise against its previous close.
The rupee has breached the 83-level against the dollar for the fifth time since August 14.
On Monday, the rupee had settled at 82.71 against the dollar.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee depreciated due to strong dollar and weak Asian currencies. “Weak global markets and disappointing macroeconomic data from India also weighed on rupee.” The U.S. dollar strengthened on safe haven demand amid risk aversion in global markets while the rupee was under pressure after the latest survey showed India’s services activity index declined to 60.1 in August from 62.3 in July.
“We expect rupee to trade with a negative bias on strong US dollar and elevated crude oil prices. Risk-off sentiments in global markets may also put downside pressure on the local currency.
“… any intervention by the Reserve Bank of India may also prevent sharp fall in rupee. USD-INR spot price is expected to trade in a range of ₹82.60 to ₹83.50,” Mr. Choudhary said.
Brent crude futures, the global oil benchmark, was trading 0.66% lower to $88.41 per barrel.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed by 0.38% to 104.64.
On the domestic equity market front, the 30-share BSE Sensex closed 152.12 points or 0.23% higher at 65,780.26 points. The broader NSE Nifty advanced 46.10 points or 0.24% to 19,574.90 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday as they offloaded shares worth ₹3,367.67 crore, according to exchange data.
