Rupee Slides To All-time Low of 76.44 as Dollar Strengthens

Paring its early gains, the rupee declined by 17 paise to close at its all-time low of 76.44 against the US dollar on Wednesday, tracking weak domestic equities and strengthening of the American currency overseas.

Forex traders said a firm US dollar index weighed on the local unit. Besides, investor sentiment remain fragile amid concerns over the impact of coronavirus outbreak on the domestic as well as global economy.

At the interbank foreign exchange, the rupee opened strong at 76.07, but soon lost ground and finally settled at 76.44, registering a fall of 17 paise over its previous close.

During the session, the rupee witnessed high volatility and touched a high of 75.99 and a low of 76.48 against the US dollar. On Monday, the rupee had settled at 76.27 against the greenback.

The forex market was closed on April 14 on account of Baba Saheb Ambedkar Jayanti.

Stocks also reversed early gains to finish in the negative territory on Wednesday as risk-off mood prevailed amid grim prognoses of the economic fallout of the Covid-19 pandemic. After gyrating over 1,346 points during the day, the 30-share BSE Sensex ended 310.21 points or 1.01 per cent lower at 30,379.81.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.56 per cent to 99.43.

Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities said the rupee traded weak due to the extension of nationwide lockdown till May 3 as this will have an adverse impact on both domestic as well as international workflow.

The nationwide lockdown, which was imposed from March 25 has been extended further till May 3 to control the spread of coronavirus.

Traders said investor sentiments remain fragile amid concerns over the impact of coronavirus outbreak on the domestic as well as global economy.

The number of positive cases around the world linked to the new coronavirus has touched nearly 20 lakh. In India, over 11,400 coronavirus cases have been reported so far.

"Markets rapidly shifted into risk aversion after oil fell to session lows amid lower demand forecast by IEA," said Devarsh Vakil, Head Advisory- HDFC Security Research.

The International Energy Agency on Wednesday said world's oil demand forecast is expected to suffer the biggest drop ever due to the economic lockdowns enforced around the world to contain the coronavirus pandemic.

"We may see it was the worst year in the history of global markets," said Fatih Birol, head of the IEA. Vakil further said that "surge in dollar index and weaker Asian currencies also weighed on the rupee. Indian rupee gave away all morning gains and turned negative by the close".

Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs 1,243.74 crore on Monday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, fell 3.72 per cent to USD 28.50 per barrel. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.3617 and for rupee/euro at 83.5657. The reference rate for rupee/British pound was fixed at 95.3681 and for rupee/100 Japanese yen at 70.80.