The Indian rupee weakened further and touched a historic low on Wednesday. Moreover, it closed at 94.05 against the US dollar. Additionally, the currency dropped 29 paise from the previous session. Therefore, the fall reflects growing pressure on the domestic unit.
At the interbank foreign exchange market, the rupee opened at 93.94. Furthermore, it traded between 93.86 and 94.08 during the day. Additionally, it settled at 94.05, marking its weakest level ever. Meanwhile, on Tuesday, the rupee had closed at 93.76.
Several factors contributed to this sharp depreciation. Moreover, heavy foreign institutional investor outflows weighed on the currency. Additionally, rising tensions in West Asia kept investors cautious. Therefore, market sentiment remained uncertain despite some positive signals.
Interestingly, global crude oil prices declined during the session. Furthermore, the US dollar index also weakened slightly. Additionally, domestic equity markets showed strong gains. However, these factors failed to support the rupee.
According to forex expert Anil Kumar Bhansali, market conditions remained risk-friendly. Moreover, investors expected progress in the ongoing conflict involving the US, Israel, and Iran. Additionally, month-end dollar demand kept pressure on the rupee. Therefore, selling activity continued despite positive equity movement.
Bhansali also shared his outlook for the rupee. Furthermore, he expects the Reserve Bank of India to defend the 94 level. Additionally, he believes the rupee could move towards 93.30 or 92.80. Moreover, he estimates a trading range between 93.25 and 94.25.
Meanwhile, the dollar index stood at 99.26, down by 0.17 percent. Furthermore, Brent crude traded lower at 99.97 dollars per barrel. Additionally, both factors typically support the rupee. However, strong capital outflows offset these advantages.
On the equity front, markets performed strongly. Moreover, the Sensex jumped 1,205 points to 75,273.45. Additionally, the Nifty rose 394.05 points to 23,306.45. However, foreign investors sold equities worth Rs 8,009.56 crore on Tuesday.
Therefore, despite strong stock market performance, the rupee continued to weaken. Moreover, external pressures and capital outflows dominated currency movement. Additionally, global uncertainty remains a key concern. Consequently, the rupee may stay volatile in the near term.
