On Friday, the rupee went down 19 paise to close at a new lifetime low of 77.93 against the US dollar, as rising crude oil prices and unabated foreign capital outflows soured sentiment.
The domestic unit was weighed down by a sell-off in equity markets and stronger dollar overseas, according to forex traders.
The local currency opened at 77.81 and witnessed an intra-day high of 77.79 and a low of 77.93 against the US dollar on the interbank foreign exchange market.
The local unit settled at 77.93, its lowest point since its previous close of 77.74, down 19 paise over its previous close of 77.74.
The Indian rupee dropped to a record low amid risk-averse sentiment, weaker macro data and a stronger dollar index. The rupee was at a new record low. Dilip Parmar, Research Analyst, HDFC Securities, said that the central bank is not involved in intervening while importers rush for dollars.
Parmar noted that the global central banks' overriding need to fight inflation with higher interest rates is a headwind for risk assets and favors the dollar bulls.
He said that spot USD-INR is expected to consolidate with a bullish bias in the range of 77.50 to 78.30 on the domestic front.
The dollar index, which measures the strength of the dollar against a basket of six currencies, rose 0.20 per cent to 103.43.
The global oil benchmark, Brent crude futures, increased by 0.51 per cent to USD 123.70 per barrel.
India buys crude oil, but retail selling prices of petrol and diesel continue to be frozen, as well as a decade high of USD 121 per barrel.
The Indian basket's price touched USD 121.28 on June 9, matching levels seen in February March 2012, according to data available from the Petroleum Planning and Analysis Cell PPAC. On the domestic equity market front, the BSE Sensex ended 1,016, according to data from the oil ministry's Petroleum Planning and Analysis Cell PPAC. It was 84 points or 1.84 per cent less than 54,303, which was 84 points or 1.84 per cent lower. The broader NSE Nifty was down 276.30 points or 1.68 per cent to 16,201, while the broader NSE Nifty fell 276.30 points or 1.68 per cent. Foreign institutional investors offloaded shares worth a net Rs 3,973 in the course of their selling spree. On Friday, 95 crore were reported to have been on Friday, according to stock exchange data.
The rupee hit its fresh all-time low but has been very resilient in the last few sessions despite the volatility in domestic and global equities and strength in the dollar against its major crosses, said Gaurang Somaiya, Forex Bullion Analyst, Motilal Oswal Financial Services.
On the domestic front, the RBI has been very active in intervening and curtailing the volatility for the rupee. He noted that global crude oil prices have been rallying, putting pressure on inflation and leading to a higher trade deficit.
The Federal Open Market Committee FOMC policy statement is scheduled to be released next week, and the dollar is getting support at lower levels. Expectation is that the Fed could continue to raise rates and maintain its hawkish stance.
We expect the USD-INR Spot to trade with a positive bias and is gradually heading towards 78.50 levels. 77.20 will continue to be an important support in the short-term, Somaiya said.