Rupee Closes Weak Against US Dollar After Hitting Record Low During The Day

The Indian rupee weakened by 4 paise to close at 84.49 against the US dollar on Thursday after it hit a fresh low of 84.5038 during the day. It closed at 84.4525 a dollar on Wednesday, according to data on Bloomberg.

This decline in the currency reflects the ongoing fluctuations in the foreign exchange market. The rupee opened weak by 5 paise at 84.39 against the US dollar on Wednesday morning as well.

The range for the day for the rupee is anticipated to be between 84.30 and 84.50, says Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

Exporters are likely to remain cautious, waiting for a potential dip with a stop loss set at 84.25, as the rupee remains under pressure due to continued demand for the US dollar, Bhansali said. On the other hand, importers are advised to buy on dips, he added.

The rupee witnessed weakness on Wednesday, primarily driven by dollar demand. The Reserve Bank of India intervened in the market, selling dollars as the rupee approached 84.47, which helped the currency appreciate slightly to 84.39 before closing near 84.4525, Bhansali said.

The rupee's performance remains under pressure, mainly due to ongoing demand for the US dollar and global uncertainties. Analysts had predicted a weaker outlook for the domestic currency, particularly after a brief period of inflows that helped it close higher on Monday.

Adding to the pressure on the rupee, global funds offloaded Rs 5,321 crore worth of Indian equities on Thursday, taking the total net outflow to Rs 1.65 lakh crore over the past 37 sessions. Additionally, the ongoing Russia-Ukraine conflict has exacerbated global market uncertainty, further impacting currencies worldwide.

Despite these challenges, the Reserve Bank of India has been actively intervening to stabilise the rupee. Measures, including interventions in the non-deliverable forward market and selling dollars, have been aimed at supporting the domestic currency amidst global volatility.