December 27th 2024.
On Friday, the rupee took a sharp dive, reaching its lowest intraday level of 85.80 against the US dollar in almost two years. However, thanks to a possible intervention from the central bank, some of the losses were recovered and the rupee eventually settled at 85.50, still a record low, but 23 paise lower than its previous closing level.
According to analysts, the Reserve Bank of India's decision to hold onto its dollar payments in short-term forward contracts contributed to the shortage of US dollars in the market. This led to importers rushing to fulfill their end-of-month payment obligations, further exacerbating the situation.
Despite a positive sentiment in the domestic equity markets, the rupee was weighed down by continuous outflow of foreign funds and the rising prices of crude oil. These factors combined to put pressure on the rupee and contribute to its fall.
At the interbank foreign exchange, the rupee opened weak at 85.31 and quickly plummeted 53 paise to reach its lowest intraday level ever at 85.80. It finally closed the session at 85.50 against the US dollar, marking a loss of 23 paise from its previous closing level of 85.27.
This sharp decline in the rupee is the steepest one-day fall since February 2, 2023 when it had fallen by 68 paise. In the past couple of weeks, the domestic unit has been hitting new lows almost every day, reflecting the current volatility in the market. Just the day before, it had dropped by 12 paise to 85.27 against the dollar, following a decline of 13 paise in the two previous sessions.
Meanwhile, the dollar index, which measures the strength of the US dollar against a basket of six currencies, was trading slightly higher at 107.94. The 10-year benchmark US Treasury yield also rose to 0.76 per cent, reaching its highest level in seven months at 4.61 per cent. In the futures market, Brent crude, the global oil benchmark, saw a slight increase of 0.15 per cent, trading at USD 73.37 per barrel.
In the domestic equity market, the 30-share BSE Sensex ended the day 226.59 points or 0.29 per cent higher at 78,699.07 points. Similarly, the Nifty also saw a slight increase of 63.20 points or 0.27 per cent, closing at 23,813.40 points.
Overall, despite the positive sentiment in the equity market, the rupee's downward trend continues to be influenced by various external factors such as foreign fund outflow and rising oil prices. The market will be closely monitored for any further interventions or developments from the central bank in the coming days.
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