The rupee closed at a fresh all time low of 78.065 against U.S. dollar on Wednesday due to demand for the greenback from foreign portfolio investors, who continued to expatriate the proceeds from the sale of their Indian equity investments. Oil marketing companies also bought dollars.
The Reserve Bank of India (RBI) is believed to have mediated in the market in a big way, selling dollars via state owned banks to stop sharp depreciation of the Indian unit (INR). Continuous dollar sales by the central bank prevented the rupee from breaking the Intra-day low of 78.10. INR closed 8 paise weaker compared to the previous close of 77.985.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, down by 0.21 percent to 104.94. International oil benchmark Brent crude futures raised 0.55 percent to USD 119.16 per barrel.
IFA Global, in a note, noticed that constant foreign fund out flows, strong dollar and elevated crude oil prices continued to weigh on investor sentiments. “Federal Reserve policymakers are anticipated to deliver the biggest U.S. interest rate hike in decades. If the Fed indicates it is willing to go all out to domestic inflation, dollar strength may continue,” the note said.
