The rupee plunged by 32 paise to close at a more than one-week low of 73.42 against the US currency on Tuesday due to dollar buying by corporates and importers and the greenback’s gain in overseas markets.
The rupee mirrored losses in most Asian and emerging market currencies while forex outflows also weighed on the unit, analysts said.
At the interbank foreign exchange market, the local currency opened lower at 73.12 and dropped to a day’s low of 73.44 later.
The domestic unit finally settled at 73.42, its lowest closing level since August 27. On Monday, the local unit settled at 73.10 against the greenback.
The rupee depreciated against the US dollar due to dollar buying by importers and an uptick in the dollar index, Sriram Iyer, Senior Research Analyst at Reliance Securities said.
The unit fell 0.4 per cent on Tuesday, its biggest single-session fall since June 19. Meanwhile, most of the EM and Asian currencies were weak on Tuesday and weighed on sentiments, Iyer said.
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd attributed the large corporate demand for dollar to the rupee’s fall.
“A strong US Dollar Index is also aiding the weakness in the rupee. However, upside remains capped thanks to exporter selling. We expect a range of 73.00 and 73.70 on spot,” Banerjee said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.22 per cent higher at 92.23.
“Profit booking in domestic equities, after touching lifetime high, and dollar outflows weighed on rupee. Traders expecting dollar outflow related to dividend from a steel company and central bank’s intervention could add pressure on the local currency,” Dilip Parmar, Research Analyst, HDFC Securities said.
Brent crude futures, the global oil benchmark, fell 0.01 per cent to USD 72.21 per barrel.
On the domestic equity market front, the BSE Sensex ended 17.43 points or 0.03 per cent lower at 58,279.48, while the broader NSE Nifty declined 15.70 points or 0.09 per cent to 17,362.10.
Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 589.36 crore, according to the exchange data.
