MUMBAI: Despite the Reserve Bank keeping a close watch on the punters, the rupee continues to head south—plumbing to a new low of 88.81 intraday Wednesday and closing barely better, at 88.80. This is the lowest closing as well as intraday dip the unit has ever seen.
At the interbank foreign exchange, the rupee opened at 88.76 against the dollar, touched an intraday low of 88.81 and finally settled for the day at 88.80, registering a loss of 3 paise over its previous close.
On Tuesday, the rupee fell three paise to close at 88.77 against the dollar. The rupee has fallen 3.72 percent so far this year, while it hit an all-time low of 88.80 last week.
Over the past week, the rupee-dollar pair had shown limited volatility, likely due to central bank interventions aimed at containing sharp fluctuations, Anindya Banerjee," head of currency & commodities at Kotak Securities, said.
Continued foreign portfolio investment outflows suggest sustained demand for dollars, which could exert upward pressure on dollar-rupee; however, exporter dollar sales and active Reserve Bank of India intervention are helping to cap the pair’s rise," Banerjee added. "On the technical front, immediate resistance is seen near 89, with a more significant barrier around 90, while key support levels lie at 88.40 and 87.75," Banerjee said.
A breakout is possible unless the RBI continues to defend the crucial 88.80 level, Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors said. Forex traders said the greenback is holding its ground, despite the dollar index being 10 percent down, though today the index, which gauges the greenback's strength against a basket of six currencies, gained 36 bps to 98.93 as, a four-week high, supported by weakness in the euro and yen, as well as safe-haven demand amid a US government shutdown that has delayed key economic data releases.
The rupee was range-bound on Wednesday and settled for the day lower by three paise at 88.80, tracking a negative trend in domestic equities amid a rise in risk-off sentiments.
The rupee is likely to remain within a narrow range, supported by domestic triggers such as IPO-related inflows, and potential progress in Indo-US trade talks could gradually tilt sentiment. Brent crude, the global oil benchmark, was trading 1.25 percent higher at $66.27 per barrel in futures trade. On the domestic equity front, the Sensex dropped 153 points to settle at 81,773.66, while the Nifty declined 62.15 points to 25,046.15.
