Rupee settles at fresh closing low of 83.66 against the US dollar

Market participants said that the Reserve Bank of India intervened in the foreign exchange market via dollar sales, which prevented the rupee from further depreciation

The rupee settled at a new closing low of Rs 83.66 against the dollar, due to the buoyant greenback and overnight rise in crude oil prices, said dealers.

It had hit an intraday record low of Rs 83.67 on June 20. The previous record closing low was also witnessed on the same day at Rs 83.65.

The rupee had settled at 83.58 on Tuesday. Money markets were closed on Wednesday on account of Muharram.

“The rupee traded weak by 8 paise to Rs 83.66, driven by volatility triggers and global market uncertainties. Despite the overall positive trend in the Indian markets, the rupee faced weakness due to US-China trade jitters, which may rise again with the potential re-election of Trump. However, Reserve Bank of India’s (RBI’s) norms and interventions have kept the rupee stable. Expenditure and income numbers in the Union Budget are expected to introduce further volatility to the rupee,” said Jateen Trivedi, vice-president, research analyst - commodity and currency, LKP Securities.

The dollar index was trading higher by 0.09 per cent at 103.83. It measures the strength of the greenback against a basket of six currencies.

“Importers were buying dollars because of the rise in crude oil prices,” said a dealer at a large state-owned bank. “The next stop should be at Rs 83.72,” he added.

Market participants said the RBI intervened in the foreign exchange market via dollar sales, which prevented the rupee from further depreciation.

“In dollar-rupee trade, there is a demand almost daily either from oil companies, government debt payment, defence or foreign portfolio investors (FPIs).

On Thursday, it was a defence deal which took it higher. The RBI intervened at Rs 83.60 and later at Rs 83.66 but it was not strong enough to bring the pair down,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

The rupee has depreciated 0.3 per cent in the current financial year, while it witnessed 0.5 per cent depreciation during this calendar year.

During the current month, the local unit has depreciated by 0.3 per cent so far.