Rupee Slumps 30 Paise to Close at Record Low of 74.06
Rupee Symbol (Photo Credits: Pixabay)

Mumbai, October 8: The rupee slumped by 30 paise to finish at a fresh lifetime low of 74.06 against the US dollar Monday amid strengthening of the greenback and steady capital outflows. The rupee had opened lower by 14 paisa against Friday's close of 73.76 in early trade as the US dollar strength against major global currencies weighed on the rupee sentiment.

During the day, the domestic currency recovered to a high of 73.76, but failed to sustain the momentum and plunged to 74.10. It finally closed at 74.06, down by 30 paise, marking its fifth straight session of decline. On Friday, the domestic unit plummeted by 18 paise to end at 73.76.

"Indian Rupee is expected to trade with a negative bias amid strong Dollar and rising crude oil prices. Demand for the dollar is going up on solid economic data from the US and, as US Federal Reserve raised interest rates by 25 bps and signalled further monetary tightening," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas. Federal Bank Gets RBI Nod to Sell 45 Per Cent Stake in NBFC Arm to True North.

Mukadam further said that traders will remain cautious ahead of the macroeconomic data, US treasury currency report and IMF meeting. "Correction in Rupee may be seen if RBI permits for special dollar swap window with some state-run fuel retailers or come up with other options to check Rupee fall," Mukadam said, adding that the expected trading range in near term is Rs 72.50 - 74.60.

The dollar demand strengthened after China's central bank eased its domestic policy to support the economy, amid a deepening trade war with the US that has increased pressure on growth in the world's second-largest economy. China's central bank said on Sunday said that it was cutting the reserve requirement rations (RRRs) by 1 per cent from October 15, which will inject a net USD 109.2 billion in cash into the banking system.

The domestic unit crashed below the 74-mark for the first time ever in the intra-day trade Friday after the RBI unexpectedly kept the policy rate unchanged.

Markets were caught off guard as the Reserve Bank maintained the status quo on the benchmark interest rate. However, the central bank warned that rising oil prices and the tightening of global financial conditions pose substantial risks to growth and inflation.

Meanwhile, heavy capital outflows also added pressure to the rupee. Foreign institutional investors remained net sellers, offloading equities worth Rs 3,370.14 crore Friday, provisional data showed.