In terms of interbank foreign exchange, the local currency began trading at 93.94 versus the US dollar and fluctuated between 93.86 and 94.08 before reaching an all-time low of 94.05 (provisional), down 29 paise from its previous closing.
Heavy FII withdrawals and simmering tensions in West Asia had investors on edge as the rupee fell 29 paise to settle at a record low of 94.05 (provisional) against the US dollar on Wednesday.
Forex traders claimed that even a decline in the price of crude oil globally, a decline in the value of the US dollar, and optimism in the home equity markets could not help the local currency. “Markets were in risk-on mode, but the rupee was still getting sold against the dollar with the month-end demand keeping the bids high despite the stock markets moving up and the dollar index down.” The rupee fell 23 paise to settle at 93.76 against the US dollar on Tuesday.
“We expect the RBI to protect the level of 94 in the current financial year and possibly take it down to 93.30 to 92.80,” stated Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. He added that the rupee is likely to trade in the range of 93.25-94.25.
All risk assets were up against the dollar as markets were expecting some agreement between the US and Iran. The dollar index, which measures how strong the US dollar is relative to a basket of six other currencies, was down 0.17 percent at 99.26.
In futures trading, Brent crude, the world’s benchmark for oil, was down 4.33 percent at USD 99.97 per barrel. Regarding the local equities market, the Nifty increased 394.05 points, or 1.72 percent, to 23,306.45, while the Sensex jumped 1,205 points, or 1.63 percent, to 75,273.45 points.
Exchange data shows that on Tuesday, foreign institutional investors sold stocks valued at Rs 8,009.56 crore on a net basis.
