Rupee slumps 43 paise to close at all-time low

Mumbai:The rupee hit the psychological 90-a-dollar level in intraday trade before settling 43 paise down at an all-time low of 89.96 against the US dollar on Tuesday, largely owing to continued short-covering from speculators and sustained importer demand for the American currency.

Forex traders said multiple pressures, like foreign fund outflows from equities and lingering uncertainty over the Indo-US trade deal, are keeping investor sentiment fragile.

At the interbank foreign exchange market, the rupee opened at 89.70, then lost its ground and fell to a record intraday low of 90.00 against the US dollar, down 47 paise over its previous close.

At the end of trade on Tuesday, the rupee settled at a record low of 89.96 against the greenback, down 43 paise over its previous close. On Monday, the rupee depreciated by eight paise to close at 89.53 against the US dollar.

“The 90 level is a major psychological barrier -- and a cluster of buy-stop orders likely sits above it. This is precisely why the RBI must remain active below 90; if the pair starts sustaining above this zone, the market could quickly shift into a higher trending phase toward 91.00 or even higher,” said Anindya Banerjee, Head Commodity and Currency, Kotak Securities.

At this stage, it is essential for the central bank to prevent speculators from becoming too comfortable with a one-way trend, as that can trigger an unnecessary spike in USD-INR volatility, Banerjee added.

According to Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, the rupee hit a fresh all time low of 89.96 amid persistent FII outflows and widening trade deficit.

“Rising odds of rate cut by the Fed in December and any intervention by the central bank may also support the rupee. USD-INR spot price is expected to trade in a range of Rs 89.60 to Rs 90.20,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06 per cent higher at 99.41.

Brent crude, the global oil benchmark, was trading 0.25 per cent lower at USD 63.03 per barrel in futures trade. From a technical perspective, the key support level was 88.80–89.00, immediate resistance at 90.00 and the next major hurdle

is at 91.00.