Rupee Weakens By 35 Paise To Close At 74.76 Against Dollar

Rupee depreciated 35 paise to close at 74.76 against the US dollar on Wednesday (November 4), tracking strong American currency ahead of the US Presidential election results. At the interbank forex market, the local unit opened at 74.74 against the greenback and finally settled at 74.76, down 35 paise over its last close. During the session, the local unit recorded an intra-day high of 74.57 and a low of 74.90 against the dollar. On Tuesday (November 3), the rupee had settled at 74.41 against the dollar.

The US presidential election is seeing a tight race for the Oval Office as Republican incumbent Donald Trump and Democratic challenger Joe Biden are appearing to closely fight it out in the key battleground states.

According to reports, most emerging market shares scored small gains while currencies were broadly weaker on hints of a tight race, sparking issues of volatility across financial markets. Meanwhile, the dollar index, rose 0.35 per cent to 93.88.

On the domestic equity market front, BSE benchmark Sensex ended 355 points higher at 40,616 and NSE benchmark Nifty 50 index advanced 95 points to close at 11,908.

The foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 146 crore on a net basis on Wednesday, according to the provisional exchange data.

Earlier in the day, the partially convertible rupee was at 74.66/67 per dollar at 10:36 am versus its previous close of 74.40.

The unit touched 74.78 earlier in the session, its weakest since August 24. Traders expect the rupee to weaken further with the unit having hit a low of 75.0550 in the overnight spot non-deliverable forwards market.

"The US election hinted at a close race with no clear winner yet in sight raising uncertainty over possible legal tussle and a delayed stimulus package. He added that this kept equity markets on edge and rebound in dollar index close to 93.90 levels thereby keeping major peers and Asian currencies for a toss," Amit Pabari, Managing Director at Forex advisory firm CR Forex said in a statement.

RBI is looking at diversifying its foreign exchange reserve investments amid the fall in global interest rates and it is likely to increase its gold investments, as well as buying dollars and exploring investing in AAA-rated corporate bonds for the first time.

As a knee-jerk to the updates, rupee broke its crucial 74.50 mark and reached close to 74.90 levels having a further scope to move close to 75.20 levels.