Rupee falls to 83.06 against dollar

New Delhi, Oct 20: The Indian currency fell to a record low against the US dollar today amid a broad rally in the greenback. The rupee fell to a record low of 82.90 per dollar, down from 82.36 in the previous session. The local currency is down about 10% against the US dollar this year. The dollar index today rose 0.33% to 112.368 on bets of aggressive rate hikes by the Fed.

 

 

 

Domestic equity markets also could not hold on to early gains and BSE benchmark Sensex traded flat in late trade. Meanwhile, the Foreign Institutional Investors were net sellers in the capital markets as they offloaded shares worth ₹153.40 crores yesterday, as per the exchange data.

 

 

 

Data meanwhile showed soaring food prices pushed British inflation back to a 40-year high at 10.1%, piling pressure on the Bank of England to hike rates again. The Federal Reserve may need to push its key rate above 4.75% if underlying inflation does not stop rising, Minneapolis Federal Reserve Bank President Neel Kashkari said late on Tuesday. Brent crude futures today dipped 0.2% to $89.87 per barrel. “On the oil front, eyes are on Biden’s announcement later today on a plan to sell off the last portion of approx. 15 million barrels of his release from the nation's emergency oil reserve by year's end, and detail a strategy to refill the stockpile when prices drop. This can bring some volatility back in the oil. Well, a toss between slow demand in China and prospects of more supply cuts from OPEC+ have so far kept the oil traders in dilemma and the commodity to trade below the three-figure mark," CR Forex advisors said in a note. Analysts believe the Reserve Bank of India's currency intervention is making the rupee less attractive for carrying traders. Its intervention in the spot and forward markets have helped pushed the 12-month implied yields on the rupee – typically a reflection of interest rate differentials with the US – to the lowest since 2011, eroding its appeal. “Back home, the RBI’s currency intervention in a spot along with a buy-sell swap to maintain the rupee liquidity has led to a sharp fall in forwarding premiums to 2.50% from 2.82% trading a month ago. This makes the rupee less attractive for carrying traders and seller and keeps them at bay also when the USD-INR trend remain on the upside.

 

Also Read: Why Nirmala Sitharaman's statement on Rupee not sliding and Dollar strengthening is correct... 

 

The USD-INR trend in the pair remains on the upside, the firecracker can start busting again for the rupee post-Diwali and the pair can set its move for another record high," CR Forex Advisors said in a note.