Rupee plunges 66 paise to drop below 83

In a sudden and sharp move, the rupee on Wednesday lost 0.8%, plunging below the 83 mark against the dollar to close the session at a historic low of 83.02. The fall of 66 paise in a single day is the steepest in recent times.

While the jump in yields on the benchmark US treasury to over 4% and the rally in the dollar weighed on the rupee, the local trigger was demand from at least two state-owned companies. Dealers said exporters came in to sell dollars towards the end of the session but to what extent the Reserve Bank of India (RBI) participated in the currency markets was not immediately known.

Also Read: Rupee likely to remain steady on retreat in dollar, stable crude prices; USDINR to trade in this range

Jayesh Mehta, country treasurer, Bank of America, said the value of the rupee over the course of the next few months would depend on the strength of the dollar and the yields on US treasuries. However, over a longer term the rupee is expected to come back to levels of around 80 to the dollar. Other Asian currencies also weakened on Wednesday, including the offshore Chinese yuan.

Lakshamanan V, senior VP, Federal Bank, said that the sharp and sudden fall in the currency was probably triggered by importer buying being bunched up. The move could be exaggerated, he added, and the rupee should retrace some of the losses.

Also Read: Rupee is not sliding, dollar is strengthening: FM Sitharaman

While elevated crude oil prices have pressured the local currency markets – India imports more than three-fourths of its oil requirements – prices have tapered off. On Wednesday, Brent was trading at around $91 per barrel.