Rupee hits fresh record low as FII outflows and dollar demand intensify

The currency depreciated 32 paise from Friday’s closing level of 90.41, after touching the intra-day low at 90.80, which is its lowest ever level.

The deadlock on the Indo-US trade deal despite the talks ending on December 12 keeps the foreign investors on the sale mode, forex dealers said. This was compounded by the strong dollar demand from importers.

“The sentiment is very negative. The pressure on rupee may continue as the market remained thin and as we approach the fag end of the year with no inflows in sight,” said KN Dey, a veteran forex consultant.

The market is now witnessing dollar outflows from both the equity and the debt segments. A total of $2.778 billion was withdrawn by foreign portfolio investors in December alone, data from NSDL showed. The total outflow in the calendar year so far was $10.329 billion.

Live Events

Agencies

“Despite the better-than-expected trade balance number, the rupee was unable to find support. This lack of resilience is primarily attributed to a significant demand-supply imbalance, driven by high dollar demand from importers and persistent capital outflows,” said Nandish Shah, deputy vice president at HDFC Securities.

The rupee opened the day weaker at 90.53 and fell to the record intraday low of 90.80, positioning it as the worst performer among the Asian peers.

“If the rupee breaches this level, we could see a crossover of 91 towards 92 against the dollar,” another forex dealer said, adding that the central bank is clearly allowing the market to determine the rupee-value and has been intervening only to control any excessive volatility.