Rupee breaches 78 per dollar mark for the first time on global cues

The rupee started depreciating rapidly since Russia invaded Ukraine in late February

The rupee breached the 78 mark against the dollar for the first time tracking the global risk-off mood and the strength of the US dollar. The currency opened at 78.14 per dollar compared to the previous close of 77.84 per dollar -- which was also an all-time low for the currency. The Indian currency touched a low of 78.23 during the morning trade.

“Weaker fundamentals are weighing on the Indian rupee with Brent crude hovering near $120/bl, raising the concerns of the widening trade deficit while the rising US interest rates are leading to concerns of further capital outflows and BOP crisis,” said Amit Pabari, managing director, CR Forex.

The rupee started depreciating rapidly after Russia invaded Ukraine in late February. The Reserve Bank of India has been aggressively intervening in the foreign exchange markets, trying to slow the pace of the fall. RBI governor Shaktikanta Das had said that the central bank will not allow a free fall of the currency while it does not target any particular level.

“USD/INR had been trading narrow ranges for the last three weeks and had been gradually grinding higher over the last 3 to 4 sessions. RBI has been intervening to prevent runaway depreciation of the rupee and to contain volatility,” IFA Global said in a note.

“The RBI may allow the Rupee to adjust given broad Dollar strength,” the note said.