Rupee falls 9 paise to settle at lifetime low of 83.22 against US dollar

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• Sep 7, 2023 | Dhupali Das

The Indian rupee continued its downward spiral for the fourth consecutive day, hitting a lifetime low of...

Digital Desk: The Indian rupee continued its downward spiral for the fourth consecutive day, hitting a lifetime low of 83.22 against the US dollar on Thursday. The decline was driven by a combination of factors, including a strong US dollar and soaring crude oil prices. However, a positive trend in domestic equity markets provided some respite for the beleaguered currency.

At the interbank foreign exchange rate, the rupee opened at 83.15 against the US dollar and fluctuated within the range of 83.12 to 83.22 throughout the trading session. Ultimately, it settled at its lowest level of 83.22 (provisional), marking a 9-paise decline from its previous closing rate of 83.13 on Wednesday.

The ongoing decline in the rupee began earlier this week when it closed at 82.71 against the US dollar on Monday, down by 9 paise. The steepest fall this week occurred on Tuesday, with a plunge of 33 paise.

Several factors have contributed to the rupee's recent struggles. One significant factor is the surge in crude oil prices, with oil breaching the $90 per barrel mark. This spike was triggered by oil-producing countries' decision to extend supply cuts until December of this year. Additionally, the US dollar has remained robust due to safe-haven demand.

"We expect the rupee to continue trading with a negative bias due to the strong dollar and elevated crude oil prices. Disappointing European data may further support the dollar. Rising US treasury yields and concerns over global economic growth may also weigh on the rupee," noted Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas.

In global markets, the dollar index, which measures the strength of the US dollar against a basket of six major currencies, rose by 0.09 percent to 104.95.

Meanwhile, Brent crude futures, the global oil benchmark, experienced a slight decline, trading 0.39 percent lower at $90.25 per barrel.

Despite the challenges faced by the rupee, the domestic equity market showed resilience. The BSE Sensex closed 385.04 points, or 0.58 percent, higher at 66,265.56 points, while the broader Nifty jumped 116 points, or 0.59 percent, to close at 19,727.05 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday, offloading shares worth ₹3,245.86 crore, according to exchange data.

As the rupee continues to grapple with external pressures, its performance will likely remain sensitive to global economic developments, particularly those related to crude oil prices and the US dollar. Investors and analysts will closely monitor these factors in the coming days to assess the rupee's trajectory in the midst of these challenging conditions.