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Rupee Declines Below 83 Mark For First Time, Plunges 61 Paise Against US Dollar

Continuing its falling trend, the rupee on Wednesday declined 61 paise to below the 83-mark for the first time ever against the dollar due to unabated foreign capital outflows and a strong dollar amid costlier crude oil in the international markets and risk-averse sentiment among investors.

The rupee opened strong at 82.32 at the interbank foreign exchange market, but later pared gains to settle at an all-time low of 83.01 (provisional) against the US dollar, down 61 paise over its previous close. In the previous session on Tuesday, the rupee slipped 10 paise to end at 82.40 against the dollar.

The rupee has fallen more than 8-9 per cent since the beginning of this calendar year. It has touched its all-time lows multiple times in 2022 so far. The fall in the rupee was aggravated by the Russia-Ukraine war which led to rising inflation globally and economic uncertainty, thus prompting capital flight from India.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.31 per cent to 112.48. Global oil benchmark Brent crude futures rose 0.82 per cent to USD 90.77 per barrel.

Anindya Banerjee, vice-president (currency derivatives and interest rate derivatives) at Kotak Securities, said, “The dollar-rupee spot closed at an all-time high at 83.02 and also at the highest point of the day. The flurry of buy orders from interbank dealers and speculators due to massive short covering pushed the market higher. It seems that the central bank was not that visibly active and that caused prices to rise sharply.”

Banerjee added that global cues were dollar positive as risk-off sentiments, a strong dollar index, weak Asian currencies and surging US bond yields, all coupled to push dollar-rupee higher. “Over the near term, we expect USD-INR to trade with a positive bias, within a range of 82.70 and 83.50 levels.”

Rahul Kalantri, vice-president (commodities) of Mehta Equities, said, “The rupee thumbed drastically against US dollar and closed to life-time low i.e above 83 as US bond yields raised by 1.5% on Wednesday resulting most of Asian currencies getting weaker and made record low against dollar.”

He added that the offshore Chinese yuan weakened past 7.23 per dollar, sliding back toward record lows. “We expect rupee might show some more weakness in coming days. We might see 84 level very soon.”

The Indian equity market edged up on Wednesday, helped by a drop in oil prices and tracking gains in other Asian equities following the overnight rally in Wall Street on strong corporate reports. The S&P BSE Sensex closed at 59,107, up 147 points or 0.25 per cent, extending its rally into fourth day. It hit an intra-day high of 59,400.

Foreign institutional investors (FIIs) remained net sellers in the capital markets as they offloaded shares worth Rs 153.40 crore on Tuesday, according to exchange data.

In October so far, foreign investors have pulled out nearly Rs 7,500 crore from the Indian equity markets on concerns of monetary policy tightening by the US Federal Reserve and other central banks globally, which could hamper global economic growth. With this, the total outflow by foreign portfolio investors (FPIs) in India has reached Rs 1.76 lakh crore so far in 2022.

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