The rupee slipped one paisa to close at a lifetime low of 88.76 against the US dollar on Thursday. It moved within a tight range amid a strong greenback and weak domestic markets. Forex traders pointed to multiple factors behind the pressure.
A strong US dollar and weak domestic equities set the tone. The H1-B visa fee hike and rising crude oil prices added to the strain. Investor concerns over global trade uncertainties weighed heavily.
Specifically, the US visa fee hike’s impact on India’s IT exports was a key worry. However, dollar selling by exporters provided some support. Reports of RBI intervention also helped prevent a steeper decline.
At the interbank foreign exchange, the rupee opened at 88.65. It reached an intraday high of 88.60 and a low of 88.76. The currency finally settled at its fresh all-time low.
The drop was minimal, just one paisa over its previous close. On Wednesday, the rupee had ended two paise down at 88.75. The marginal movement indicated a controlled depreciation.
Anil Kumar Bhansali of Finrex Treasury Advisors noted the RBI’s role. He said intervention around 88.70 levels showed a preference for measured depreciation. Market participants are closely watching the central bank’s actions ahead of its October 1 meeting.
Bhansali cited global uncertainties and geopolitical tensions. Despite these pressures, the rupee showed small resilience. The RBI’s measured approach is a key factor.
Meanwhile, the dollar index was trading 0.07 percent lower at 97.80. This gauge measures the greenback against a basket of six currencies. The slight dip did little to ease pressure on the rupee.
Brent crude futures fell 0.39 percent to $69.04 per barrel. Even with this drop, oil prices remain a concern for the currency. Higher crude import bills typically hurt the rupee.
Anuj Choudhary of Mirae Asset ShareKhan expects the rupee to remain weak. He cited recovery in the US dollar and risk aversion in global markets. Geopolitical tensions between Russia and Ukraine add to the caution.
The US visa fee hike and rising crude may pressurise the rupee further. However, dollar selling by exporters could offer support at lower levels. Traders will monitor key US economic data for direction.
Choudhary mentioned final Q2 GDP and weekly unemployment claims. Durable goods orders from the US will also be crucial. The USD/INR spot price is expected to trade between 88.40 and 89.10.
Domestic equity markets saw significant declines. The Sensex tumbled 555.95 points to settle at 81,159.68. The Nifty fell 166.05 points to 24,890.85.
Foreign Institutional Investors were net sellers. They offloaded equities worth Rs 2,425.75 crore on Wednesday. This outflow added to the negative sentiment.
On the trade front, Commerce Minister Piyush Goyal is in the US for talks. He is accompanied by senior officials including chief negotiator Rajesh Agrawal. Goyal has held discussions with his US counterpart.
This visit follows recent talks in New Delhi between US and Indian negotiators. The backdrop includes ongoing efforts toward a bilateral trade agreement. Market participants are watching these developments closely.