The Indian rupee breached the 92/$1 mark for the first time on Wednesday to a record low, mirroring the steepest weekly climb in the fear gauge for equity assets since the initial Covid shutdowns six years ago, as the West Asian war disrupted supplies of oil and industrial gases and compelled investors to buy safe-haven dollar assets.
The rupee fell 68 paise from Monday’s closing level of 91.47 to a dollar – at 92.15 – and its losses would have been even steeper in the absence of evident, late-afternoon interventions from RBI, traders said.
“Selling of dollars by the central bank arrested the slide of rupee as the pair traded at a high of 92.31/$1, where we saw slightly aggressive offers,” said Sudarshan Nambiar, head of trading, Yes Bank. “The rupee will continue to trade with a depreciation bias amidst the worsened geopolitical scene. Importer hedging will likely add to the pressure on the pair.” Traders said the central bank sold dollars, slowing the pace of depreciation for the local unit, as energy shares bled on Dalal Street on mounting concerns of protracted supply disruptions for both crude oil and natural gas, which fires several smokestack industries along India’s west coast.
The rupee had hit its previous record low of 91.98/$1 on January 31, but then managed to defend the 91/$1 mark for most of February after the US-India trade deal announcement.
The rupee was also the worst-performing Asian currency Wednesday, and has declined over 2% since the start of this calendar year. Traders expect the rupee to trade between 92.00 and 92.50 on Thursday.
Traders said central bank interventions were more frequent near 92.27/$1 to 92.30/$1, just as the spot market was about to close. That helped the rupee
