Rupee Falls 23ps To Fresh Low Of 85.50/$

Mumbai: The rupee fell steepest in almost two years to hit its lifetime intraday low of 85.80 before a suspected central bank intervention helped recover some of its losses and settled 23paise lower at a record low of 85.50 against the US dollar on Friday due to a strong greenback amid increased month-end demand from banks and importers.

According to analysts, the Reserve Bank’s stance to hold on to its dollar payments in short-term forward contracts added to the shortage of greenback, with importers rushing to meet their month-end payment obligations. Despite robust sentiment in domestic equity markets, the rupee was weighed down by sustained outflow of foreign funds and rising crude oil prices, they added. At the interbank foreign exchange, the rupee opened weak at 85.31 and plunged 53paise to the lowest-ever intraday level of 85.80.

The unit finally ended the session at 85.50 against the greenback, losing 23paise from its previous closing level of 85.27. The rupee’s earlier sharpest one-day fall of 68 paise was recorded on February 2, 2023. The domestic unit has been hitting new lows almost every day in the past couple of weeks. It had plunged 12paise to 85.27 against the dollar on Thursday after declining 13 paise in the previous two sessions.

“The central bank holds $21 billion in short-side forward contracts set to mature in December and January. Market speculation suggests that the RBI has refrained from rolling over these maturing forwards, leading to a scarcity of dollars and an oversupply of rupees. “Moreover, dollar liquidity in the market remains very low, amplifying the upward momentum in the pair. This imbalance has propelled the USD-INR pair towards 85.80 levels,” said Amit Pabari, MD of CR Forex Advisors.