Rupee Closes At A Fresh Low Of 74.39/$

The rupee on Tuesday closed at a fresh low of 74.39 against the U.S. dollar amid high crude oil prices, strengthening of the greenback and unabated foreign fund outflows.

At the Interbank Foreign Exchange, the rupee made a cautious recovery of 18 paise to 73.88 against the dollar in early trade on fresh selling of the American currency by banks and exporters. It finally closed at 74.39 against the greenback, down 32 paise, marking its sixth straight session of decline.

The domestic currency failed to sustain the momentum after Brent crude breached the $84-per-barrel-mark again and the U.S. dollar strengthened overseas. Traders said unabated foreign fund outflows, too, weighed on the rupee. Foreign institutional investors sold shares worth a net of Rs 1,805 crore on Monday, provisional data showed. Foreign exchange dealers said concerns over rising fiscal deficit and capital outflows impacted the domestic currency.

The global brokerage said policy responses to the depreciating currency have been muted so far and with limited policy response, concerns on the rupee have risen significantly. “We believe a fall in oil prices will only possibly help stabilise the rupee.”

Traders said higher U.S. bonds yields resulted in the weak Indian currency. “Interest rates are headed higher in the U.S. The U.S. 10-year bond yields surged to 3.26 percent. Fears that global investors will withdraw their funds from global markets and park in U.S. Treasuries is affecting the global markets,” said VK Sharma, head PCG and capital markets strategy at HDFC Securities.

In the broader market, the BSE Sensex erased all its early gains to end lower by 175 points—its fourth fall in five sessions. The 30-share Sensex opened higher at 34,651.82 points but slipped into the negative zone to hit a low of 34,233.50 before finishing at 34,299.47, a fall of 174.91 points, or 0.51 per cent.