Rupee hits record low of 88.75 against dollar on FII outflows, H-1B visa fee hike

The rupee slid 47 paise to a historic low amid fears that the steep US H-1B visa levy will hit Indian IT exports, even as foreign fund withdrawals and weak market sentiment piled on pressure.

Mumbai: The rupee depreciated 47 paise to hit an all-time low of 88.75 (provisional) against the US dollar on Tuesday, amid sustained outflow of foreign funds on the back of a steep hike in US H-1B visa fee that is expected to give a big blow to Indian IT services exports.

Forex traders said the rupee dwindled towards record low levels as market participants analysed the likely repercussions of the new USD 100,000 H-1B visa levy, which could precipitate a slowdown in remittance growth and curtail service exports to the US.

Moreover, risk aversion in domestic markets may also pressurise the rupee, they said.

At the interbank foreign exchange, the rupee opened at 88.41, then lost further ground and touched an all-time intraday low of 88.82 against the US dollar, and finally settled for the day at 88.75 (provisional), registering a decline of 47 paise over its previous close.

On Monday, the rupee depreciated by 12 paise to close at 88.28 against the US dollar.

"We expect the rupee to remain weak as the US visa fee hike issue may continue to dampen domestic market sentiments and may result in foreign outflows. However, overall weakness in global crude oil prices may support the domestic currency," said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.

Choudhary further noted that any intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels.

"Traders may take cues from PMI and current account balance data from the US. Traders may also take cues from US President Donald Trump and Fed Chair Jerome Powell's speech," Choudhary said, adding that USD-INR spot price is expected to trade in a range of 88.45 to 89.20.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent lower at 97.28.

Brent crude, the global oil benchmark, was trading 0.41 per cent higher at USD 66.84 per barrel in futures trade.

On the domestic equity market front, Sensex declined 57.87 points to settle at 82,102.10, while the Nifty dropped 32.85 points to 25,169.50.

Meanwhile, Foreign Institutional Investors offloaded equities worth Rs 2,910.09 crore on Monday, according to exchange data.

Forex traders said that headwinds such as the enhanced US tariffs on Indian goods weighed on investor sentiment.

Commerce and Industry Minister Piyush Goyal is leading an official delegation to the US for trade talks.

The delegation plans to hold talks with the US team to take forward discussions with a view to achieving an early conclusion of a mutually beneficial trade agreement.

The minister will visit New York, accompanied by the special secretary in the ministry, Rajesh Agrawal, and other officials.