Rupee plunges to record low of 83.15 against US dollar
The Reserve Bank of India (RBI) stepped in the market to arrest the slide and sold dollars via public sector banks, which helped the local currency to stabilise.
Published: 18th August 2023 08:44 AM | Last Updated: 18th August 2023 08:44 AM | A+A A-
Image used for representational purposes only. (Express Illustrations)
MUMBAI: The rupee plunged to its lowest closing level of 83.15 against the US dollar on Thursday compared to the close of 82.96, mainly hit by global factors such as rise in treasury yields in US and weakness in global equities.
The local currency opened at 83 on Thursday morning and touched a low of 83.16 per dollar. The Reserve Bank of India (RBI) stepped in the market to arrest the slide and sold dollars via public sector banks, which helped the local currency to stabilise. RBI’s forex reserves have risen over $600 billion, which provides the central bank enough room to defend the local currency.
“We suspect Reserve Bank of India may have intervened and sold dollars. However, over the near term, bias remains upward and we could see the rupee breaching 83.24, previous all-time highs,” Anindya Banerjee, VP - Currency Derivatives & Interest Rate Derivatives at Kotak Securities
The rupee had touched its life-time low of 83.29 on October 20, last year during intra-day trade. The rupee has been under pressure since Tuesday and traders expected a weak opening on Thursday. The domestic currency market was closed on Tuesday and Wednesday for a public holiday.
“The dollar gained on hawkish FOMC minutes which showed all members of the rate-setting committee support higher interest rates to fight inflation. Upbeat housing, industrial production, and capacity utilisation rate data from the US also supported Dollar,” said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas. US Treasury yields rose after meeting minutes from the Federal Reserve stated that most policymakers feel that inflation risks could require further interest rate hikes.
The dollar index also gained following the release of the minutes. The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.05% to 103.48. Better than-expected data in US relating to Producer Price Index (PPI), retail sales, and industrial production have raised expectations of more rate hikes by the US central bank. Analysts expect the rupee under pressure in the near term as US dollar is likely to get stronger in the coming weeks. “We expect the rupee to trade with a negative bias on risk aversion in global markets and a strong US dollar.
RBI steps in market to arrest slide in rupee
The Reserve Bank of India (RBI) stepped in the market to arrest the slide and sold dollars via public sector banks, which helped the local currency to stabilise. RBI’s forex reserves have risen over $600 billion, which provides the central bank enough room to defend the local currency. The local currency opened at 83 on Thursday morning and touched a low of 83.16 per dollar
