Rupee hits all-time low; ends 22 paise weaker at 87.88 against US dollar
Forex traders said the rupee is likely to slide further as India-US trade deal uncertainty continues to dent domestic market sentiments.
Mumbai, Aug 5 (PTI) The rupee revisited its all-time low level and ended with a loss of 22 paise at 87.88 against the US dollar on Tuesday, as risk-off sentiment deepened after US President Donald Trump renewed threats to raise tariffs on Indian goods over New Delhi's continued purchases of Russian oil.
A soft US dollar and overnight decline in crude oil prices also cushioned the downside to some extent, they said.
At the interbank foreign exchange, the domestic unit opened at 87.95 against the greenback, its lowest-ever intra-day level that was previously recorded on February 10 this year. During the session, it touched the high of 87.75 against the American currency.
At the end of Tuesday's trading session, the domestic unit was at 87.88, down 22 paise over its previous close.
On Monday, the rupee depreciated 48 paise to close at 87.66 against the US dollar.
In a fresh trade threat against India, President Donald Trump on Monday said he will 'substantially' raise US tariffs on New Delhi, accusing it of buying massive amounts of Russian oil and selling it for big profits.
Last week, the Trump administration slapped a 25 per cent duty on all Indian goods. The US president also announced a penalty for buying 'vast majority' of Russian military equipment and crude oil.
'We expect the rupee to continue to slide as India-US trade deal uncertainty continues to dent domestic market sentiments. Weak tone in the domestic equities and FII outflows may further pressurise the rupee,' Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan, said.
Investors also stayed cautious ahead of the RBI monetary policy decision this week.
Choudhary further said: 'Market expects a rate cut by the central bank. However, overall weakness in the US dollar amid rising odds of a rate cut by the Fed in September may support the rupee at lower levels.' RBI Governor Sanjay Malhotra-headed rate-setting panel on Monday started the three-day deliberations to decide the next bi-monthly monetary policy.
The six-member Monetary Policy Committee (MPC) is scheduled to announce the policy rate on Wednesday.
Dilip Parmar, Senior Research Analyst, HDFC Securities, said concerns over potential tariff hikes weighed on the Indian rupee.
The currency consolidated within a narrow range after a weak start, supported by expected dollar inflows from state banks and lower imported commodity prices. However, caution persists amid ongoing foreign fund outflows and trade uncertainties.
'Attention now turns to the Reserve Bank of India's monetary policy announcement. While a status quo is expected, any surprise rate cut or easing signal could boost market sentiment,' Parmar said.
Meanwhile, Brent crude prices fell 0.97 per cent to USD 68.09 per barrel in futures trade, after OPEC+ agreed to hike another large output increase in September, adding to oversupply concerns after US data showed lacklustre fuel demand.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.18 per cent to 98.68.
In the domestic equity market, the 30-share BSE Sensex declined 308.47 points to settle at 80,710.25, while the Nifty was down 73.20 to 24,649.55.
Foreign institutional investors (FIIs) offloaded equities worth Rs 22.48 crore on a net basis on Tuesday, according to exchange data. PTI DRR HVA
This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
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