The rupee hit a new all-time low against the dollar for the fourth straight trading session as the currency ended at 77.73/$, amid continued risk aversion among investors over the prospects of the US Fed tightening interest rate policy. Intervention from the Reserve Bank of India (RBI) helped the currency to cap its losses.
The rupee opened weaker at 77.70/$ as compared to Wednesday’s close of 77.58/$ and traded in a narrow range amid intervention from the central bank. After touching the day’s low of 77.74/$, the currency closed the day at 77.73/$, weakening by 15 paisa than its previous close.
“The USDINR pair ended slightly up tracking a sell-off from domestic indices as the global risk-off mood, along with the prospects for a more aggressive policy tightening by the Fed supported safe-haven dollar demand,” IFA Global said in a note . “The RBI’s continued intervention today to protect the level of 77.70 has capped any major gains in the pair,” IFA Global said. The rupee has lost 2.7 per cent value since the Russia-Ukraine war broke out on February 24.
“Overall, the outlook on rupee doesn’t seem promising as factors such as a fall in equities, volatile commodity prices, uncertainty over growth, hawkish Fed, and a stronger USD suggest a depreciating bias. Hence, we expect the rupee to steadily depreciate toward 78.00-78.20 over the short term to medium term,” said Amit Pabari, managing director, CR Forex.