The rupee depreciated 3 paise to revisit all-time closing low of 83.40 against the US dollar on Wednesday amid a strong American currency overseas.
Forex traders said a steep fall in crude oil prices from USD 76 per barrel to the below USD 73 level provided support, but a muted trend in equity markets triggered negative bias against the local unit.
At the interbank foreign exchange market, the local unit opened at 83.39 against the greenback and traded in a tight range of 83.38-83.42.
After dropping to its all-time intra-day low of 83.42, the rupee finally settled at 83.40, a fall of 3 paise from the previous close.
On Tuesday, the domestic currency settled at 83.37 against the dollar.
The rupee had earlier recorded its lowest closing level of 83.40 on November 24 this year.
“Rupee closed marginally lower amid high volatility in the dollar index that plunged again due to gains in the euro and the Japanese Yen. A fall in crude oil prices also failed to provide any support to the rupee. We expect the rupee to remain volatile and trade in the range of 83.20-83.70,” according to Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
The government data released on Tuesday showed India’s retail inflation rose to a three-month high of 5.55 per cent in November, though it remained within the RBI’s comfort zone of less than 6 per cent.
Industrial production growth, however, accelerated to a 16-month high of 11.7 per cent in October, mainly due to double-digit growth in manufacturing, power and mining sectors’ output, according to the official data.
Forex traders are awaiting the US Federal Reserve’s monetary policy decision to be announced on Wednesday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent higher at 103.55 on Wednesday.
Brent crude futures, the global oil benchmark, declined 0.38 per cent to USD 72.96 per barrel.
In the domestic equity market, the 30-share BSE Sensex settled 33.57 points or 0.05 per cent higher at 69,584.60 points. The broader NSE Nifty inched up 19.95 points or 0.01 per cent at 20,926.35 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Wednesday as they bought shares worth Rs 4,710.86 crore, according to exchange data.
Jateen Trivedi, VP Research Analyst at LKP Securities, said: “A break on the lower side is more likely, with support around 83.50. A strong close above may signal a weak momentum toward the 83.90-84.20 zones. The upcoming Fed’s policy is expected to keep rates stable, but market focus will be on the commentary for potential currency impacts”.
