The rupee edged closer to the historic low of 80-mark against the US currency on Thursday as it declined by a little over 18 Pietàs to settle at 79.9975 amid a stronger greenback in overseas markets.
While wholesale inflation remained double-digit for 15 straight months to June, expected deterioration in the country's current account deficit and forex outflows dragged the local unit near to the psychological low level of 80 against the greenback.
A sharp correction in crude oil prices in the past few days, however, has been a breather for the local currency, analysts said.
At the interbank foreign exchange market, the rupee started the day on a strong note and touched a high of 79.71 to a dollar in early trade. The local unit lost momentum after the dollar surged to 24-year high levels against a basket of global currencies in the early European trade.
The rupee finally settled at the day's lowest level of 79.9975 to a dollar, down by 18 Pietàs over the previous close of 79.81.
Some leading banks such as SBI were already quoting above 80 levels for selling the US dollar.
Last month, it touched a record high of 15.88 per cent. In June 2021, it was 12.07 per cent.
A finance ministry update stated that India's current account deficit is expected to deteriorate in the current fiscal on account of costlier imports and tepid merchandise exports.
To meet the financing needs of a widening CAD and rising FBI outflows, forex reserves, in the six months since January 2022, have declined by USD 34 billion, it said.
The Indian rupee becomes the median performer among the regional currencies. The rupee closed at a record low for the fourth day in a row amid safe-haven demand for the dollar after US inflation surged to a 41-year-high. The rate markets now are pricing aggressive rate hikes from Federal Reserve which supported the dollar, Di lip Par mar, Research Analyst, HDFC Securities, said.
Spot USD/INR delayed to the level 80 in today's session but, is expected to break in the coming days. The pair has resistance at 80.90 after crossing 80 while the support shifted to 78.80 from 78.50,he noted.
The Rupee continued to remained under pressure as the dollar rose sharply against its major crosses. Today, it fell to fresh all-time lows against the US dollar. Market participants remained cautious ahead of the (US) inflation number that was released yesterday. Data showed year-on-year consumer price growth accelerated to a scorching 9.1 per cent, Gaurav Somalia, Forex & Bullion Analyst, Mozilla Oswald Financial Services, said.
This fuelled speculation that the Federal Reserve will raise interest rates even more than the 75 basis points previously expected. We expect the USD/INR (spot) to trade with a positive bias and quote in the range of 79.40 and 80.00 in the short term, he added.
The aggressive policy course by the US Fed to curb rising price pressures is exacerbating fears of a weakening growth outlook and leading to risk aversion in the markets, Uganda achieve, Vice President - Commodity and Currency Research, Relegate Brooking Ltd said.
Besides, we have seen a relentless rise in the dollar index, while the euro has been hit hard as it tumbled below parity against the dollar for the first time in almost 20 years. Europe is grappling with an energy supply crunch owing to sanctions on Russia that make it more susceptible to recession risks.
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