The Indian rupee depreciated by 32 paise to hit an all-time low of 95.20 against the US dollar in early trade on Thursday, driven by surging global crude oil prices and a robust greenback.
Rupee opens lower, extends losses
At the interbank foreign exchange market, the rupee opened at 95.01 and weakened further to touch a record low of 95.20, continuing its downward trend from the previous session. On Wednesday, the currency had fallen 20 paise to close at 94.88 against the dollar.
Factors weighing on the rupee
Forex traders indicated that the USD/INR pair may face additional downside, as elevated oil prices are expected to increase India's import bill. Concerns over a broader conflict in West Asia continue to dampen investor sentiment.
Brent crude, the global oil benchmark, rose 3.16 percent to USD 121.76 per barrel in futures trade. Meanwhile, the dollar index edged 0.01 percent higher to 98.96, reflecting continued strength in the US currency after the Federal Reserve kept interest rates unchanged.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented: "The main effect on the rupee has been from the rising oil prices, which touched USD 120 per barrel and looked headed for further upside as the US continues with its blockade of Iranian ports, while Iran does not allow any ship or tanker to pass through the Strait of Hormuz."
Equity markets and FPI outflows
In the domestic equity market, the BSE Sensex fell 821.79 points to 76,674.57 in early trade, while the NSE Nifty declined 287.3 points to 23,890.35.
Foreign Portfolio Investors (FPIs) continued to offload Indian equities, selling shares worth Rs 2,468.42 crore on Wednesday, according to exchange data. Bhansali added: "FPIs continue with their sale of Indian equities and debt (the yield touched 7 percent on Wednesday) and are also dollar buyers consistently."
