Mumbai, Aug 30 (IANS) High global crude oil prices, along with continuous outflow of foreign funds pulled the Indian rupee to a fresh intra-day and closing low on Thursday.
Analysts pointed out that caution ahead of key macro-economic data, coupled with a rise in demand for US dollars also dragged the rupee lower.
“High crude oil prices have pulled the rupee lower,” Anand Rathi Shares and Stock Brokers’ Research Analyst Rushabh Maru told IANS.
“Most emerging market (EM) currencies were down and this also pressurised the Indian rupee.”
On an intra-day basis, the Indian rupee plunged to 70.85 — the lowest ever mark — against the greenback at the Interbank foreign exchange market. It surpassed the previous record low of 70.65-66 to a greenback made on Wednesday.
It settled at a record closing low of 70.74-75 against the US dollar, weaker 15 by paise from Wednesday’s close of 70.59-60 to a US dollar.
According to Tradebulls’ Director and Chief Operating Officer, Dhruv Desai: “Currently sensitivity of Indian rupee to crude oil prices is very high.”
“In spite of weakening US Dollar since last week, Indian rupee struggled to gain against US dollar as market is pricing in higher current account deficit due to rise in crude prices.”
Apart from high crude oil, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.
Investment-wise, data from the NSDL on Thursday showed that foreign portfolio investors (FPIs) sold scrip worth Rs 1,379.34 crore.
Besides, caution prevailed ahead of the release of India’s GDP and fiscal deficit data. The key macro-economic data points will be released on Friday.
“Rupee needs more support from RBI or some big global positive news. The trend remains weak until some sizeable intervention by RBI verbal or actual. There is a lot of panic buying amongst importers and equity investors as well who want to hedge the currency risk now,” said Sajal Gupta, Head Forex and Rates, Edelweiss Securities.
“Our macros remain robust but panic is the key factor behind current volatility. Everyone is a buyer of dollars in current market.”
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.