New Delhi
Indian currency touched an all-time low of 78.9 against the dollar on the persistent outflow of foreign funds and high crude oil prices. The local currency closed the day at 78.77, 43 paise below the previous close.
Foreign portfolio investors sold `1,244 crores worth of Indian equities and debt on Tuesday, while Brent crude rose 2% to trade around $113 a barrel. The huge expiry of dollar-rupee futures exacerbated the pressure to push the rupee to fresh record low levels.
Currency analysts told that RBI intervention rescued the rupee as it regained over 20 paise to close at a higher level. Sale of the US currency by some state-run banks, likely on behalf of the Reserve Bank of India, capped the rupee’s further weakness, says Sriram Iyer, senior research analyst at Reliance Securities.
However, analysts believe despite RBI’s interventions, the central bank can’t stop the rupee from going below 79 and ultimately 80 levels. While RBIs war chest remains robust, it will not fight the inherent weakening trend of the rupee, says Upasna Bhardwaj, chief economist, Kotak Mahindra Bank.
The rupee has lost 5.7% since the beginning of 2022 due to a massive outflow of foreign funds and high crude oil prices. Since the start of 2022, FPIs have pulled out $29 billion from Indian markets.
