The Indian rupee recovered from its all-time low against the US dollar, closing at 89.96 on Thursday, appreciating by 19 paise after briefly plunging to 90.43. The recovery came amid a weakening US dollar index and indications of intervention from the Reserve Bank of India (RBI), according to forex traders.
The rupee opened lower, starting at 90.36 and reaching a record low of 90.43 due to foreign investor selling pressures and rising crude oil prices, exacerbated by uncertainty surrounding the India-US trade deal. By the conclusion of Thursday’s trading, the rupee managed a provisional closing at 89.96, reflecting a 19 paise gain from its previous close.
Earlier on Wednesday, the rupee had settled at 90.15, marking its first breach of the 90-a-dollar threshold. Chief Economic Adviser V Anantha Nageswaran noted that the depreciating rupee has not directly impacted inflation or exports. While a weaker rupee may support exports, it makes imports more expensive, potentially straining sectors like gems and jewellery, petroleum, and electronics due to increased input costs, he added.
The dollar index, which measures the greenback’s value against a basket of six currencies, was trading slightly lower at 98.84. Meanwhile, Brent crude, the global oil benchmark, rose by 0.22 percent, reaching USD 62.81 per barrel in futures trade.
Analysts suggest that the rupee may continue facing downward pressures from foreign institutional investors (FIIs) amid sluggish domestic market sentiment and heightened crude oil prices. Anuj Choudhary, a research analyst at Mirae Asset ShareKhan, commented that despite these pressures, a weak US dollar following disappointing job data and increasing likelihood of a Federal Reserve rate cut in December could provide some support for the rupee.
Traders are also awaiting the weekly US unemployment claims data and the RBI’s forthcoming monetary policy decision, which is anticipated to be announced on Friday. The meeting takes place against a backdrop of falling inflation and rising GDP growth, as the rupee’s depreciation coincides with ongoing geopolitical tensions. On the domestic equity front, the Sensex rose by 158.51 points, settling at 85,265.32, while the Nifty increased by 47.75 points to reach 26,033.75.
On Wednesday, FIIs offloaded equities worth Rs 3,206.92 crore on a net basis, according to exchange data.
The RBI’s six-member rate-setting panel, headed by Governor Sanjay Malhotra, is expected to address these economic challenges during their meeting.
