Rupee Ends At Record Closing Low Against U.S. Dollar
Rupee depreciated 28 paise to close at Rs 83.43 against the U.S. dollar. It had closed at Rs 83.15 a dollar on Thursday, according to Bloomberg data.
The Indian rupee depreciated to its lowest closing against the U.S. dollar on Friday amid a renewed rally in the greenback.
The local currency depreciated 28 paise to close at Rs 83.43 against the U.S. dollar. It had closed at Rs 83.15 a dollar on Thursday, according to Bloomberg data. During the day, the domestic currency went as low as Rs 83.43.
The previous lowest close was recorded on Dec. 13, 2023, at Rs 83.4.
The dollar's rally comes after the U.S. Federal Reserve also kept its key interest rate steady for the fifth straight time and continued to signal three rate cuts this year.
"Over (the) last few days, there is a dollar shortage in the system which has put pressure on the rupee," Vikas Bajaj, head of currency derivatives at Kotak Securities, said. "People were long on the rupee, but because RBI has been mopping up all the dollar inflows, that is not reflecting in the market."
Traders have been buying the rupee against other Asian currencies in the offshore market for better returns, Bajaj said.
Moreover, as the RBI took delivery of its $5 billion FX swap two weeks ago, the overnight dollar-rupee forward rate has come under pressure, Bajaj said.
A weakness in the rupee is also likely on account of fall in offshore Chinese yuan during early trade, according to currency traders. The Chinese yuan slipped to its lowest level in four months on Friday in the offshore market.
The strengthening of the dollar and the rapid depreciation of Japanese yen and other Asian currencies after the Bank of Japan ended its negative interest rate policy weighed on the yuan.
Currency traders expect the RBI to intervene in the dollar/rupee market at around Rs 83.40 a dollar to curb a sharp fall in the rupee.
The rupee is also under pressure due to dollar payments by importers at the end of the financial year, Ritesh Bhansali, vice-president at Mecklai Financial Services, said.
Despite the dovish view on interest rates in the US, specific data-driven interest rate cuts are still distant, Jateen Trivedi, research analyst at LKP Securities, said.
