Rupee logs worst day in nearly 19 months, dives 104 paise against USD

The Indian rupee on Friday posted its biggest single-day fall in nearly 19 months, tumbling 104 paise to close at 73.47 against the US dollar as a rout in global bond markets weighed on investor sentiments.

Besides, rising geopolitical tensions between the US and Syria also led to a weaker appetite among investors in domestic forex markets, analysts said.

At the interbank forex market, the local unit opened at 72.43 against the greenback, then lost further ground to touch an intra-day low of 73.51.

It finally ended at 73.47 against the American currency, registering a massive fall of 104 paise over its previous close – the biggest single-day fall for the rupee since August 5, 2019.

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On Thursday, the rupee had settled at 72.43 against the American currency.

On a weekly basis, the rupee has tumbled 82 paise against the US dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.43 per cent to 90.52.

"US bond yields have surged on worries about inflationary pressures due to unprecedented liquidity infusion in the system and a series of economic data, which is indicating that the economy is on the path to normalcy. This has in-turn led to a rebound in the dollar index and prompted a selloff in risk assets,” Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking, said.

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However, it is too early to term this as a weakening bias for the domestic currency, and unless it sustains levels below 73.50 comfortably, the scope for appreciation remains, she added.

Jateen Trivedi, the Senior Research Analyst at LKP Securities, said, "Rupee traded very weak with a gap down opening near 73.00 of around more than 0.50p mainly on the back of an uptick in dollar index which touched 90.50 along with the steep rise in US Treasury Yield. FED Chair Powell's statement of confidence on higher bond gave the dollar the push. Crude prices also trade higher which keeps the pressure on the rupee. The current spike can keep the rupee below 72.75 going ahead."

The rupee fell sharply against the US dollar following a surge in US 10-year yields and a rise in geopolitical tension between US and Syria, said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The United States launched airstrikes in Syria on Thursday, targeting facilities near the Iraqi border used by Iranian-backed militia groups.

In the Asian session, the dollar has rebounded sharply against its major crosses and escalation of the same could trigger further volatility for the currency, Somaiyaa noted.

Meanwhile, Brent crude futures, the global oil benchmark, fell 0.99 per cent to USD 66.22 per barrel.

On the domestic equity market front, the BSE Sensex ended 1,939.32 points or 3.80 per cent lower at 49,099.99, while the broader NSE Nifty slumped 568.20 points or 3.76 per cent to 14,529.15.