The Indian rupee extended weakness in the late dealings on Tuesday and hit a fresh all-time low against US dollar at the interbank foreign exchange market after plummetting as much as 46 paise apiece USD. The rupee closed very near to the 73/$ mark on Tuesday. According to the data available on Bloomberg, the rupee crashed as much as 46 paise to hit an all-time low of 72.9675 on Tuesday before finishing at a lifetime closing low of 72.9662 against US dollar. The domestic currency, however, regained about 15 paise to 72.3562 from the previous closing of 72.5050 in the morning trades.
The sharp plunge in the rupee was observed exactly after Reuters reported, citing an unidentified finance ministry source, that India sees rupee value of 72-73 against the US dollar as “fair value”. The rupee started falling after 2:30 pm on Tuesday and struck a day’s bottom of 72.81 vs USD. Later in the closing trades, the rupee dropped 46 paise to a new all-time low of 72.9675 against US dollar. “The rupee could again come under pressure once the new US sanctions on Iran comes into force,” due to a possible rise in oil prices, the Reuters report said quoting an unnamed finance ministry source.
The sentiments amid domestic forex and equity markets battered further after China said that it has left with no other choice but to retaliate against the latest trade tariffs imposed by the POTUS Donald Trump. According to a Reuters report, China’s Foreign Ministry spokesperson Geng Shuang said that the US steps have brought “new uncertainty” to talks between the two countries.
Strengthening crude oil prices seemed to have added to the rupee woes on Tuesday. Crude oil prices firmed on Tuesday on signs that OPEC would not be prepared to raise output to address shrinking supplies from Iran and as Saudi Arabia signalled it was in no rush to bring prices down, Reuters said in a report. At the time of writing, Brent crude futures were trading at 78.99, up 94 cents or 1.20% a barrel, after hitting a high of $79.37 while US West Texas Intermediate (WTI) crude was trading at 69.79, up 88 cents or 1.28%, after rising over $1 to $69.95.
The Financial Benchmarks India Private Limited (FBIL) on Tuesday fixed the reference rate of the rupee at 72.3796 against the US dollar and 84.7657 for the euro. The reference rates for the similar quotes were at 72.5505 and 84.3985, respectively on Monday.