The rupee closed at 79.92 against the US dollar after touching an all-time low of 80.05 during the early trade, reported PTI. The rupee had opened at 80 against the dollar and then declined to 80.05.
It, however, recovered 6 paise on strong regional currencies and a positive domestic equity market.
On Monday, the currency had touched the 80-mark briefly against the dollar for the first time ever, according to PTI. It, however, valued at 79.98 at the end of the session.
On Tuesday, Dilip Parmar, a research analyst at HDFC Securities, said that the rupee breached the 80-mark due to strong US dollar amid higher crude oil prices.
“However, the central bank’s intervention and stronger regional currencies and equities supported the rupee to erase early morning losses,” he added.
Market experts, however, say that the risk for the rupee to weaken further remains.
“Oil prices, especially, remain a bit volatile, while external headwinds on account of Fed [US Federal Reserve] tightening may continue,” said Dhiraj Nim, economist and FX strategist at Australia and New Zealand Banking Group Limited, according to Bloomberg. “The trade imbalance also remains wide.”
Sriram Iyer, a senior research analyst at Reliance Securities, told PTI that lack of intervention from the Reserve Bank of India to arrest the currency’s decline could weigh on sentiments.
Though, the central bank had last week introduced a new mechanism for international trade settlements in rupees and announced measures to draw more forex inflows into the country.
On Monday, Union Finance Minister Nirmala Sitharaman said that the value of the rupee has depreciated by around 25% against the dollar since December 2014, according to ANI.
She attributed the rupee’s sharp fall to the rise in prices of crude oil and the war between Russia and Ukraine.
In response to a starred question in the Lok Sabha, Sitharaman, however, also said that the rupee has strengthened in comparison to other major global currencies.
“Currencies such as the British pound, the Japanese yen and the euro have weakened more than the Indian rupee against the US dollar,” she told the Lower House. “And therefore, the Indian rupee has strengthened against these currencies in 2022.”