Rupee breaches 82 mark against dollar on forex outflows

The rupee plunged below the 82 mark for the first time in day trade before settling down by 40 paise at 81.93 against the US dollar on Wednesday due to heavy forex outflows amid strengthening US treasury yields.

Moreover, a negative trend in domestic equities and a stronger dollar in overseas markets sapped investor appetite, forex traders said.

At the interbank foreign exchange, the rupee opened at 81.90 and later fell to 82.02 to a dollar in day trade due to risk-averse sentiment among investors.

The rupee finally settled at 81.93, its all-time closing low.

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The Indian rupee hit a fresh record low against the dollar on Wednesday weighed down by a rise in US treasury yields and the dollar, Sriram Iyer, Senior Research Analyst at Reliance Securities.

"However, the fall was less than at its Asian peers as the Reserve Bank of India intervened in the market today," Iyer said.

Offshore Chinese yuan weakened by 0.90 per cent, while Singapore Dollar weakened by 0.48 per cent, while the Korean Won weakened by 0.83 per cent and were the worst performers amongst Asian peers.

In the overseas markets, the dollar index continued to remain elevated this Wednesday trade in Asia lifted by hawkish remarks from Federal Reserve officials.

Traders also await the RBI’s monetary policy decision and details of the government's borrowing plan for the rest of the fiscal.

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee continued to fall as the dollar rose sharply against its major crosses.

"Expectations of aggressive rate hikes by the US Fed helped the dollar extend gains. On the domestic front, focus will be on the RBI policy statement. Expectation is that the central bank could raise rates by 50bps and maintain a hawkish stance," Somaiya said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.40 per cent to 114.55.

Also Read | Gold falls as dollar, bond yields climb to multi-year peaks

Meanwhile, investors are eying the RBI monetary policy meeting decision on Friday.

Global oil benchmark Brent crude futures fell 1.33 per cent to $85.12 per barrel.

On the domestic equity market front, the 30-share BSE Sensex was trading 373.37 points or 0.65 per cent lower at 56,734.15, while the broader NSE Nifty fell 108.20 points or 0.64 per cent to 16,899.20.

Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 2,772.49 crore, as per exchange data.