Rupee settles at record closing low of 83.39 against the US dollar

The Indian rupee on Tuesday settled at an all-time closing low of 83.39 against the US dollar due to the rise in the Dollar Index, dealers said. The rupee had hit the same level on November 30.

The Indian currency had settled at Rs 83.37 a dollar on Monday. The continuous demand for the greenback from importers further weighed on the local currency, market participants said.

The local currency had witnessed a record low of Rs 83.48 (intraday) against the dollar on November 10.

The Dollar Index, which measures the strength of the greenback against a basket of six major currencies, rose to 103.65, against 103.31 on Monday.

The local currency is expected to depreciate further in December as the demand for the Dollar is speculated to continue.

“Continuously there is good demand from importers. Even though there is dollar sale by the Reserve Bank of India, still we have seen rupee depreciation at the end,” said V.R.C. Reddy, head of treasury at Karur Vysya Bank. “I am seeing the rupee to be around Rs 83.50- Rs 83.60 a dollar by the end of the year,” he added.

Market participants speculated that the Reserve Bank of India's intervention in the foreign exchange market safeguarded the rupee from further depreciation.

“The rupee was weak today (Tuesday) because of the rise in the Dollar Index. But, the nationalised banks sold dollars for the central bank at around Rs 83.40 per Dollar level, which helped the rupee,” a dealer at a state-owned bank said.

While emerging market currencies regained their ground against the US dollar in November, the Indian rupee lagged behind its peers, primarily due to persistent demand for the Dollar among importers.

In the current financial year, the rupee has depreciated by 1.5 per cent, whereas, in the current calendar year, it has depreciated by 0.8 per cent so far. However, it had appreciated by 0.16 per cent in the first six months of the current calendar year on the back of robust foreign inflows.

In November, the Indian rupee depreciated by 0.2 per cent, even though the Dollar Index fell by around 4 per cent in the same period. Consequently, the rupee emerged as the worst-performing currency among its Asian peers during the month, being the sole currency to depreciate while other currencies appreciated.

“Despite the Nifty reaching new highs, the Indian rupee seems to be out of step, trading near its all-time low. This discrepancy can be attributed to factors such as a five-year low liquidity deficit causing the Reserve Bank of India's restrained intervention in selling dollars. The robust demand for dollars from oil and gold importers, leading to a widening trade deficit, has also confined the rupee to a narrow range of 83.00-83.40,” said Amit Pabari, managing director at CR Forex.