MUMBAI: The rupee continued its downward spiral for the third day, losing 32 paise against the dollar and plumbing to a new life-time low of 89.85 in morning trade Tuesday, weighed down by the broad strength of the greenback in overseas markets and persistent foreign fund outflows coupled with the still-missing trade deal with the US as well as rising chance of an status quo on the rates side from the Reserve Bank later this week.
The beleaguered currency, which has lost almost 5% year-to-date opened 89.70 against, 5 paise up from the previous close of 89.755 to a dollar when it was down 49 paise from Friday’s closing, but soon lost the keel and drifted down to hit a new low of 89.92, down 32 paise from its previous close.
The local unit is just 15 paise shy of touching the psychologically sensitive 90 marks, which market men feel is closer than it appears now.
Traders said strong dollar demand from corporates, importers and foreign portfolio investors pressured the rupee. Moreover, elevated crude prices further dented investor sentiment.
On Monday, the rupee, after sinking to 89.79 in intraday trade, settled at 89.755 against the dollar.
The RBI has been selling dollars, but it has also bought dollars when the rupee rose, thus keeping the demand intact," Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors said in a note.
Bhansali also noted that the strong economic fundamentals like the blowout GDP growth of 8.2 percent, are overshadowed by the rising dollar demand. Another pain point is the still missing uncertainties trade deal with the US and the government’s continuing promise of a deal within days have not helped the rupee at all but in fact has actually aggravated the dollar buying syndrome," he added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.41.
On the domestic equities front, the benchmark Sensex declined is trading over 300 points down from yesterday’s close, a third straight day of losses, while the Nifty was down over 100 points at 1130 hrs.