Rupee Hits Record Low: Breaches 90 Against Dollar

Mumbai, Dec 3 (PTI) The rupee breached the 90-a-dollar level for the first time to settle at a fresh all-time low of 90.21 (provisional) on Wednesday, down 25 paise from its previous close, amid sustained foreign fund outflows and higher crude oil prices.

Uncertainty over the India-US trade deal, along with the lack of Reserve Bank of India (RBI) effort to stop the slide in the local unit, put further pressure on the rupee, according to forex traders.

At the interbank foreign exchange, the rupee opened at 89.96 against the US dollar and fell to a record intraday low of 90.30 during the session before closing at a new all-time low of 90.21 (provisional), down 25 paise from its previous close.

On Tuesday, the rupee settled 43 paise down at a lifetime low of 89.96 against the US dollar, largely owing to continued short-covering from speculators and sustained importer demand for the American currency.

"The rupee hit a fresh all-time low of 90.30 amid selling pressure from foreign investors and a surge in crude oil prices. Uncertainty over the announcement of India-US trade deal has also weighed on the rupee. However, a weak US dollar index prevented a sharp fall," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

"We expect the rupee to trade with a slight negative bias on persistent FII outflows and higher crude oil prices. However, a weak dollar and rising odds of a rate cut by the Fed in December may support the rupee at lower levels," he said, adding that the USD-INR spot price is expected to trade in a range of Rs 89.80 to Rs 90.50.

"The rupee was easily allowed by the RBI to cross 90, and it even fell to 90.30 before the RBI stepped in," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Meanwhile, the seasonally adjusted HSBC India Services PMI Business Activity Index rose to 59.8 in November, from 58.9 in October, supported by new business growth.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent lower at 99.16.

Brent crude, the global oil benchmark, was trading 0.91 per cent lower at USD 63.02 per barrel in futures trade.

On the domestic equity market front, Sensex declined 31.46 points to settle at 85,106.81, while Nifty was down 46.20 points to 25,986.

Foreign Institutional Investors sold equities worth Rs 3,642.30 crore on Tuesday, according to exchange data.