Rupee hits fresh record low of 73.79 against $

Rupee hits fresh record low of 73.79 against $

Consistent dollar demand from importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure. (Reuters file photo)

The rupee continued its downward trend and hit a new low of 73.79 against the US dollar in early trade on Thursday and roiled equity markets sentiments too with Sensex tanking more than 600 points and Nifty trading below 10,700.

Surge in oil prices kept the dollar demand up from oil importers exerting more pressure on the rupee. Hardening US interest rates ensured further flight of capital from emerging markets, including India, to the mother market of dollars.

Brent crude breached the $86 per barrel level, near its four-year high.

Though state-owned oil marketing companies were given a green signal by the Reserve Bank of India to raise $10 billion from overseas market to meet their working capital needs, they have been asked to seek their board approvals and have a prudent risk management policy for such borrowings.

This could delay the process of raising their dollar loans abroad. But the move is expected to improve the dollar inflow into India in the long run.

Investors are keeping a close watch on the RBI's monetary policy decision on Friday where it is widely expected to hike interest rates for the third consecutive time to help stem rupee's fall and curb inflation expectations from high oil prices.

However, this time around investors are also looking for a word from RBI Governor Urjit Patel on how the bank and the government are looking at stabilising the financial markets which have witnessed a sell off in the past two weeks. 

Credit: Sajith Kumar/Outlook