The rupee on Wednesday dipped below the level of 82 against the dollar for the first time and finally closed at an all-time low of 81.93, down 40 paise. The rupee depreciated on the back of a firming US currency in overseas markets and investors refraining from investing in riskier markets.
The continued fall in the domestic equity market and continued capital outflows by foreign investors also added to the pressure on the domestic currency. The rupee opened at 81.90 in the interbank foreign exchange market. On Tuesday, it had gained 14 paise to close at 81.53 against the dollar.
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Sugandha Sachdeva, Vice-President (Commodity & Currency Research), Religare Broking Limited said that the current phase of selling in rupee is going on due to limited intervention by RBI amid fall in forex reserves.
Meanwhile, the dollar index, which measures the strength of the dollar against the world’s six major currencies, climbed 0.43% to 114.59. Experts say that now everyone’s focus is on the meeting of the monetary policy committee of RBI. In this meeting, the decision on policy rates will come on Friday.
Sachdeva said the rupee further fell to new lows amid risk aversion sentiment in the markets. A breakdown in domestic equity markets and the dollar index approaching a crucial 20-year high of 115 also weighed on the local currency. Most Asian currencies have fallen this year on fears of a global slowdown, while the US dollar has gained 19.50 per cent.
Gold prices fell by Rs 435 to Rs 49,282 per 10 grams in the Delhi bullion market on Wednesday due to the softening of precious metals in the global market. Silver also became cheaper by Rs 1,600 to Rs 54,765 per kg. In the previous session, gold had closed at Rs 49,717 per 10 grams. In the international market, gold was trading softly at $ 1,615.7 an ounce, which is the lowest level since April 2020.
The domestic stock markets also declined for the sixth day on Wednesday. Weakness in global markets and frequent capital outflows kept the market down. The Sensex fell 509.24 points to 56,598.28 and the Nifty lost 148.80 points to end at 16,858.60. Investors’ capital declined by 1.73 lakh crore to 268.42 lakh crore. Shares of 18 companies out of 30 Sensex closed in the red mark. Foreign institutional investors sold shares worth Rs 3,039.94 crore on Wednesday.