Rupee Ends At Record Low Amid Forex Outflows
The local currency depreciated 12 paise to end at an all-time low of Rs 83.96 against the dollar.
The Indian rupee closed at a record low on Tuesday as global funds continued to pull out of domestic stocks amid the ongoing unwinding of the yen carry trade and rising fear of recession in the US.
The local currency depreciated 12 paise to end at an all-time low of Rs 83.96, according to Bloomberg data. It had closed at Rs 83.84 against the greenback on Monday. The currency had opened at Rs 83.86 against the dollar.
It fell as low as Rs 84.25 during the overnight session in the NDF market in New York, Bloomberg data showed.
The rupee weakness was also due to higher demand for the greenback from oil importers on account of the rising Brent crude oil price. Brent crude rose 0.30% to $76.53 as of 3:30 p.m., aided by a 0.38% rise in the dollar index. Oil prices rose on fears of a spreading West-Asia conflict that could hit supplies, while worries of a possible US recession linger.
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After market close on Monday itself, the USD/INR pair had even traded at Rs 84.14 levels, according to Kunal Sodhani, vice president of Shinhan Bank. "Today, may be, intervention was seen in offshore during opening hours, due to which USD/INR opened lower around Rs 83.86 levels."
The rupee is being sold off in good times and bad times, indicating the demand for the dollar is due to the pullout of the FPIs from the Indian equity market amid high valuation concerns, according to Anil Bhansali, executive director at Finrex Treasury Advisors LLP.
The unwinding of carry trade in the Japanese yen led to its appreciation against the US dollar, which disrupted global markets.
The Bank of Japan, in line with market expectations, hiked its benchmark interest rate to 0.25% from 0.0–0.1% last week. Expectations of further hikes by the central bank have resulted in a sell-off of the yen-funded carry trade.
