The rupee weakened to a new low against the US dollar on Monday that witnessed BSE index to 57968 a bearish drop of (-865.32) points with in one hour of Monday trade
The rupee weakened to a low of 80.14 per US dollar in the first few minutes of trade on Monday as the US dollar index strengthened well past the 109 mark.
The previous lifetime low for the rupee was 80.06 per dollar on July 19.
The domestic currency, which had settled at 79.87 per dollar on Friday, regained some ground due to the Reserve Bank of India’s market interventions through dollar sales, dealers said.
The local unit was at 80.02 per dollar at 9:30 am IST.
As the greenback surged globally following Federal Reserve Chair Jerome Powell’s firm commitment to tackling high inflation even at the cost of economic growth.
At the Jackson Hole Economic Symposium on Friday, Powell said that “restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”
The US dollar index, which measures the currency against six major rival currencies, was last at 109.33 as against 108.20 at the end of Indian market hours on Friday. The index has strengthened more than 14 per cent so far in 2022.
A stronger US dollar exerts pressure on emerging market currencies such as the rupee and weakens the appetite of overseas investors for Indian assets.
The rupee has weakened a little more than 7 per cent in 2022.
Dealers said that the RBI had intervened in the market around the 80.05-80.10 per dollar mark and would prevent excessive volatility in the exchange rate.
“Now, it would be all about RBI’s tolerance or intolerance of these record levels. If they think to curb the same, then we could see easing up to 79.70-80 levels or else pressure will take the pair towards 80.30 levels,” CR Forex Advisors MD Amit Pabari said.
“For confirmation of the technical breakout, one should wait for initial hours and check whether the pair is holding 80.05 or not,” he said. He sees the rupee in a band of 79.70-80.30 per dollar for the day.